The I Bond Thread

[xlf11]

You always get next business date purchase on TD, so you want to get in today or tomorrow for April purchase date!

 

[bobbyr]

thanks folks --

last question is what to put in for purchase date

I am assuming 1/1/2023 for the gift to my wife, but want to confirm before submitting

 

[RetiredAndLovingIt]

thank you - I get it now!

now to find how to do it on the site...I guess I have until Saturday to pick up the 7.12?

I would not wait til the last minute, if you're serious do it right now. They need to pull the funds this month and it normally takes a day and I'm betting right now it might take longer.

 

[Gumby]

thanks folks --

last question is what to put in for purchase date

I am assuming 1/1/2023 for the gift to my wife, but want to confirm before submitting

If you want to buy right now to get the 7.12%, the purchase date is today 4/28/22. Delivery of the gift is an entirely separate operation.

 

[cyber888]

Hi Cyber888,

Is there a benefit to waiting on your 2024 purchase?

thanks.

Was thinking of paying a large chunk of my remaining mortgage .. that's why I'm on the fence. Just trying to balance liquidity for emergencies.

 

[Gumby]

I would not wait til the last minute, if you're serious do it right now. They need to pull the funds this month and it normally takes a day and I'm betting right now it might take longer.

When I have purchased, it always occurred on the next business day, so if you wait until tomorrow (4/29), it will be too late.

 

[bobbyr]

If you want to buy right now to get the 7.12%, the purchase date is today 4/28/22. Delivery of the gift is an entirely separate operation.

thank you...I found a good article on it for clarity as well

feel very fortunate to jump on this in time to pick up the 7.12

debating on doing 2024 now...may hold off, as we aren't swimming in cash - we'll see

thanks to all for feedback

 

[11522914]

When I have purchased, it always occurred on the next business day, so if you wait until tomorrow (4/29), it will be too late.

+1

 

[Montecfo]

Was thinking of paying a large chunk of my remaining mortgage .. that's why I'm on the fence. Just trying to balance liquidity for emergencies.

Yes I hear you. This idea came up kind of suddenly.

Thanks.

 

[cyber888]

Yes I hear you. This idea came up kind of suddenly.

Thanks.

Yeah, anyway, I figured that if inflation goes down and iBonds will get to 3.5% percent after the 9.62 % .. and I got some around November 25-27 to lock the 9.62% followed by 3.5% .. That would still get me around 6.5% average for 1 year (instead of 8.3%). Still much better than a CD.

 

[MJ]

I was concerned about lowering my liquid cash too much but just discovered this a bit of information. I have a number of certificates at various credit unions and after calling each one, I found out that I can withdraw up to all interest earned WITHOUT penalty so I felt comfortable about getting another $20K for 2025 knowing I have money I can easily tap into if needed.

 

[pb4uski]

thanks folks --

last question is what to put in for purchase date

I am assuming 1/1/2023 for the gift to my wife, but want to confirm before submitting

No, you want to purchase the gifts for your wife today. They will sit in your account's gift box from when it is purchased (today) until you deliver the gift to her.

Assuming that she has already bought $10k for 2022, then the earliest that you can deliver a gift to her would be 1/1/23 and whatever you deliver would count towards her 2023 purchase allowance of $10k.

 

[Montecfo]

I'm on the fence about 2024. Bulls feel free to pursuade me. 2023 was no brainer.

Thanks in advance.

 

[RetiredAndLovingIt]

I was concerned about lowering my liquid cash too much but just discovered this a bit of information. I have a number of certificates at various credit unions and after calling each one, I found out that I can withdraw up to all interest earned WITHOUT penalty so I felt comfortable about getting another $20K for 2025 knowing I have money I can easily tap into if needed.

I'm glad you mentioned this. Just last week Alaska USA told me I could not withdraw my CD interest when I called them to check. I had planned on visiting the local office to double check and I totally forgot till now.
By the way I can confirm that GTE Financial will allow interest withdrawal on that promo CD that many of us on here purchased a few years back.

 

[Gumby]

I'm on the fence about 2024. Bulls feel free to pursuade me. 2023 was no brainer.

Thanks in advance.

This post by pb4uski sets forth a convincing case:

https://www.early-retirement.org/forums/f28/the-i-bond-thread-113668-30.html#post2759472

 

[Sunset]

I'm really interested in this, but am not fully understanding. On the Treasury Direct website it says:

It sounds like you discovered a way around this limit. Am I understanding that correctly?

I cannot take credit for it, it's really a widely known fact by folks interested in investing.

It is a way to pre-purchase the bonds all at once rather than wait years, so in effect it is a way around the limit.

This limit used to be much higher a few years ago.
Also the gov't also makes it easy to go over the $10K limit every year, by allowing $5K in income tax refunds. Making the limit more like $15K per year for a single person.

If you have some spare cash (does not have to be $10K) to lock up for a year, it's a screaming hot investment with zero risk.

 

[pb4uski]

I'm on the fence about 2024. Bulls feel free to pursuade me. 2023 was no brainer.

Thanks in advance.

IMO, 2024 is a no brainer too. Cash flows assuming 7.12% for 6 months, then 9.62% for 6 months, then 0% for 9 months less 3 months early withdrawal penalty at 0%:

	2024 i-bond
XIRR	4.79%
04/01/22	-10,000
01/01/24	10,854
21	months

Where else can you get a minimum of a 4.79% yield for 21 months with no credit risk?

2025 is a closer call, but I did it anyway because I really think that 0% for the 21 months after the first 12 months is unduly conservative.

	2025 i-bond
XIRR	3.02%
04/01/22	-10,000
01/01/25	10,854
33	months

If I substitute 3% for 18 months on top of the first 12 months then I get 4.69% which is better than a 33 month CD or UST:

	2025 i-bond
XIRR	4.69%
04/01/22	-10,000
01/01/25	11,346
33	months

 

[Gumby]

I think the November 2022 reset rate will be over 6%, so it is not close for me at all. Of course, I was buying those I-bonds with cash that was in my checking account earning 0.02%

 

[pb4uski]

+1 I think 6% is much more likely than 3% or 0%.

 

[Jerry1]

I finished my transaction today. Me and DW each bought $10K. Did that yesterday and confirmed that everything cleared today. Then, I went in and changed the registration to POD dw/me as appropriate. They don't make it clear how to do this, but I figured it out without too much trouble.

We basically took the money from our credit union "high yield" account, earning less than 1% so it was a great deal. I'd like to do the gifting, but I'm not sitting on enough cash and I didn't want to sell anything just yet. I may not get the best deal by waiting, but I still think these bonds will pay more than most other safe investments for awhile, so I'll be keeping an eye on them and my cash position and probably buy a couple gifts before the year is out.

This has been a very informative thread. I'm thankful for the education.

 

[bobbyr]

IMO, 2024 is a no brainer too. Cash flows assuming 7.12% for 6 months, then 9.62% for 6 months, then 0% for 9 months less 3 months early withdrawal penalty at 0%:

I jumped on 2024 too...

 

[MJ]

This has been a terrific thread. Never knew about gifting and the information sharing has been stellar!

 

[Montecfo]

Ok, I bought through 2024 now. And $5K from tax refund which should arrive any day.

Thanks to all.

 

[Gumby]

Just a quick note for those comparing I-Bonds to CDs. I-Bond interest is exempt from state income tax, so you need to adjust the interest rate of CDs to make them tax equivalent.

For example, my marginal state tax rate is 5.5%. To tax adjust CD rates to compare them to I-Bond rates, I need to multiply the stated CD rate by 0.945. So a 4.5% I-Bond is better than a 4.5% CD for the same period. In fact, the CD rate would have to exceed 4.76% before the CD would be a better deal for me.

 

[Aiming_4_55]

Hi all - interesting thread, unfortunately I'm new on this topic and got to this thread late (yesterday, 4/28 at 10:45pm central time).

It looks like my purchase went through, but my gift purchases appear to show status of "Purchase Requested" with a date of 4/29. I know I submitted before midnight my local time, but guessing Treasury Direct uses Eastern time.

What happens now? Will my Gift Purchases be effective on Monday, 5/2? If so, what rate will it be as a gift in about 5 days or 1/1/2023?

Thanks for sharing your knowledge.