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Old 08-30-2014, 02:38 PM   #1
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IBonds

What do folks think of these? With higher inflation probably in the future good place to park cash? Has anyone transferred these to their brokerage account?


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Old 08-30-2014, 02:51 PM   #2
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Ibonds have been frequently mentioned on the forum. This thread may be helpful.

TIPS or IBONDS, To Buy or Not To Buy... ?
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Old 08-30-2014, 02:53 PM   #3
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Originally Posted by Free To Canoe View Post
Ibonds have been frequently mentioned on the forum. This thread may be helpful.

TIPS or IBONDS, To Buy or Not To Buy... ?

Last post was 2006 a different world. Looking for more current info.


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Old 08-30-2014, 03:54 PM   #4
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I like I Bonds and use them as part of my fixed income portfolio, my wife and I buy our limit of $10k each every year. I bonds are purchased and held through Treasury Direct, they cannot be transferred to an outside brokerage.


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Old 08-30-2014, 04:57 PM   #5
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I keep them as part of my cash reserves. Since CD rates suck these days I may be adding to my I bonds.
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Old 08-30-2014, 05:58 PM   #6
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Last post was 2006 a different world. Looking for more current info.


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It is a world that is more friendly to Ibonds which you can tell from the historical perspective.

To answer your question, I like em.
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Old 08-30-2014, 06:01 PM   #7
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Can you take the divvys on these monthly or do you have to redeem the whole wad?


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Old 08-30-2014, 06:14 PM   #8
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I bonds are an all or nothing proposition when it comes to redemptions. So make sure you buy in bite size pieces (that might be 10k or considerably less). On the plus side, the interest is not taxable until you redeem the bond.
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Old 08-30-2014, 06:15 PM   #9
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Super, thx


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Old 08-30-2014, 06:30 PM   #10
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I think that it is possible to do partial redemptions on electronic i-bonds. Alan has done it, and here is someone else who has too:

http://www.mymoneyblog.com/partial_redempt.html

I like i-bonds and buy the maximum allowed each year.
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Old 08-30-2014, 06:44 PM   #11
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FIREd is correct about partial redemptions of electronic i-bonds.

From the Treasury Direct Redeeming (Cashing in) I Bonds web page:

Quote:
How much can I redeem at one time?

Electronic bonds in your TreasuryDirect account

No limit. However, each redemption must be in a minimum amount of $25 redemption value, with additional one-cent increments above that amount, in any one transaction. Redemptions will be comprised of principal and proportionate interest.
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Old 08-30-2014, 11:03 PM   #12
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I'm considering buying I-Bonds also. Never owned any before.

Any idea whether tax deferred I-Bond income affects ACA subsidies?
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Old 08-31-2014, 12:37 AM   #13
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I'm considering buying I-Bonds also. Never owned any before.

Any idea whether tax deferred I-Bond income affects ACA subsidies?

It's interest income, reported on your federal taxes, so that would affect your MAGI and your ACA subsidy. How much the subsidy is affected would depend on when you chose to report that income on your taxes.

This is from the Treasury Direct site:
Tax Considerations for I Bonds

When must I report the interest on my tax form?
You have a choice. You can
  • report the interest every year
  • put off (defer) reporting the interest until you file a federal income tax return for the year in which the first of these events occurs:
    -- you redeem (cash in) the bond and receive what the bond is worth, including the interest, or
    -- you give up ownership of the bond and the bond is reissued, or
    -- the bond stops earning interest because it has reached final maturity
[...]
Whether you are reporting interest at the end of the bond's life or every year, you report the interest from your bonds on your federal income tax return on the same line with other interest income.

(See the rest of that page for pros & cons of reporting interest income every year vs deferring reporting the income until the bond is cashed in.)
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Old 08-31-2014, 06:43 AM   #14
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Have you ever redeemed an ibond? Is it a simple process?


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Old 08-31-2014, 06:47 AM   #15
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Yes also on the partial redemptions. I think Nords has done this.

How easy to redeem? If from the bank where you originally bought - easy. Otherwise a medallion signature may be required.
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Old 08-31-2014, 08:14 AM   #16
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When I ERed I got a bit more conservative in my fixed income and I was looking at I-Bonds as a place to stash money as a buffer against a market down turn. However, I have a stable value fund in my 457 that pays just over 2% so I went with that......but I would have bought some I-Bonds if I didn't have the stable value fund.
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Old 08-31-2014, 08:45 AM   #17
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I bought a couple of these every pay period for my kids education since they were available. Keep them in the name of the parents and you could have them federal income tax free for college cost categories. They are always state income tax free. The fixed interest component used to be pretty good early on (over 3%); these past few years it has been pathetic. Still, the inflation-based interest component is better than checking/savings/most multi-year CDs... It was disappointing that they put a max limit on purchase amount per year and you can no longer get paper bonds unless you get it via your tax refund.
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Old 08-31-2014, 09:22 AM   #18
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The only problem with I-bonds today is a) the fixed portion is zero and b) you can only buy small amounts. Still, very happy I backed the truck up back in the day when you get $120,000 per person (electronic and paper 60,000 each) and could turbo charge the return by buying with a cash rebate credit card. Man those were the good ole days...
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Old 08-31-2014, 09:53 AM   #19
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The only problem with I-bonds today is a) the fixed portion is zero...
Actually the current fixed rate is 0.10%...
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Old 08-31-2014, 10:35 AM   #20
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Actually the current fixed rate is 0.10%...
I stand corrected, but the point effectively still stands.
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