The I Bond Thread

[pb4uski]

Keep in mind that you must hold them one year and from one to five years there is a 3-month early withdrawal penalty and no early withdrawal penalty after 5 years.

So worst case if you invested $10,000 today and the rate for the second 6 months is 8%, if you redeem on April 1, 2023 you would receive $10,563.. 5.63%... better than any 1-year CD on the planet.

If you hold 15-months, you would receive $10,770.... over 6% annualized rate and better than any other 15-month CD available.

So I'll keep buying and staying as long as the yields are more attractive than long term CDs.

 

[finnski1]

Keep in mind that you must hold them one year and from one to five years there is a 3-month early withdrawal penalty and no early withdrawal penalty after 5 years.

So worst case if you invested $10,000 today and the rate for the second 6 months is 8%, if you redeem on April 1, 2023 you would receive $10,563.. 5.63%... better than any 1-year CD on the planet.

If you hold 15-months, you would receive $10,770.... over 6% annualized rate and better than any other 15-month CD available.

So I'll keep buying and staying as long as the yields are more attractive than long term CDs.

+1

 

[Mulligan]

The formula is spelled out on the Treasury website. For the next rate adjustment, you will take the CPI-U for March 2022 (which will be reported on 4/10/22) and divide it by the CPI-U for September 2021. That should come out to around 1.04. Which is about 4% for 6 months or an annual rate of about 8%. They will use that to reset the rates starting on May 1, 2022. On November 1, 2022, the rate will reset again. And it will be the CPI-U for September 2022 divided by the CPI-U for March 2022. What that rate will be depends on inflation between March and September.

So, for example, the $10k in I-bonds I bought in December 2021 will earn an annual rate of 7.12% (the current rate) until they reset on June 1, 2022. Then, $356 will be added to the principal (compounding), and that $10,356 will earn at an annual rate of ~8% until December 1, when the rate will reset again. And the $10k I bond I bought in January will earn 7.12% until July 1, 2022, when it will compound (i.e, - add $356 to principal), reset to ~8% and stay there until January 1, 2023.

The fixed rate (currently 0%) probably will not change until the rate for TIPs goes positive. It is discretionary with the Treasury.

Gumby, funny how expectations change as next cycle is likely comfortably over 7% for next cycle, also…..To think I actually bought last years purchase in September to make sure I got the 3.5% ish cycle first before the current one. Im just now starting to get the 7.12% from that purchase.

 

[Chuckanut]

To think I actually bought last years purchase in September to make sure I got the 3.5% ish cycle first before the current one. Im just now starting to get the 7.12% from that purchase.

You were very wise, IMO. You were getting 3.5% on one of the safest securities in the world, while I was thinking that 1% at the T-Mobile bank was a big deal.

 

[jj]

We are in strange times indeed when I bonds are our highest-yielding investment. Our holding added over $3000 interest as of April 1st yesterday.

 

[Sunset]

DW and I just gave each other a gift of $10K ..... ain't love ten grand

 

[daver]

No, was afraid that using joint might screw up the gifting, so have them as sole owner, not even a beneficiary named (also something Gal isn't happy about). We each have TD sign-ins and individual accounts - I did sign into both accounts from the same machine, which I'll avoid next time.

We also gifted each other using sole owner registration. I can't figure out how to add myself as beneficiary to the I Bond in the gift box. The edit registration link only shows the I Bonds that I purchased i.e. "my name with DW" to edit?

 

[Sunset]

We also gifted each other using sole owner registration. I can't figure out how to add myself as beneficiary to the I Bond in the gift box. The edit registration link only shows the I Bonds that I purchased i.e. "my name with DW" to edit?

Someone already posted this link , I had to watch it 2 or 3 times to be sure I was going to do it correctly.

https://www.treasurydirect.gov/indiv/tools/purchasing-a-gift-bond.htm

The trick is: when buying the bond to gift, add a new registrant, and on that page click on the beneficiary radio button, then fill in the owner for the first name area, and the beneficiary in the second name owner, and click on gift near the bottom.

I'm going by memory, so watch the short video a few times.

I have no clue how to fix the issue if you buy it wrong, which is why I wanted to get it right the first time.
Let us know how a person fixes it when you find out.

 

[Linney]

We also gifted each other using sole owner registration. I can't figure out how to add myself as beneficiary to the I Bond in the gift box. The edit registration link only shows the I Bonds that I purchased i.e. "my name with DW" to edit?

Once you have purchased the gift I-bond, I don't think you can change it. I did the same thing and didn't see any way to fix it. If someone knows how, please let us know!

I was successful in setting up a beneficiary on my second gift I-bond purchase, however. The gift I-bond registration looks like this:

Mr.Linney POD Linney​

I didn't want to log back into TD so here are the steps per Harry Sit's website: When you buy the I Bonds you’re asked to pick an existing registration or create a new one. Choose to create a new one. There will be three radio buttons for the new registration: Sole Owner, Primary Owner, or Beneficiary. Choose the third radio button (“Beneficiary”) Enter gift recipient's name & information as the “first-named registrant” and enter your name & information as the “second-named registrant.”

The steps are totally non-obvious. But that's Treasury Direct!

 

[mystang52]

A few others here had the same experience, I believe: In January I bought another $10,000 I Bond. I got a notice on April 1st that 2 old Bonds had matured, $414. Forgetting the maximum, I automatically just bought a new I Bond for that amount. A day later I got an email that I was over the maximum and the money will be sent to my bank account. As of now, anyway, my record shows I have that I Bond of $414.

 

[calmloki]

Back on 3/16 I was informed I'd over-bought I-bonds (a botched gift attempt). TD's email to me noted that they would refund the funds in 8-10 weeks. Figured they were doing an under-promise over-deliver thing, but may be wrong about that as well.

 

[thefinancebuff]

We also gifted each other using sole owner registration. I can't figure out how to add myself as beneficiary to the I Bond in the gift box. The edit registration link only shows the I Bonds that I purchased i.e. "my name with DW" to edit?

No way to change it when it's already in the gift box. The recipient can add a beneficiary after you deliver it out of your gift box.

 

[pb4uski]

....I logged onto Treasury Direct and created a converted bond account and created a manifest and will mail them in later today. Converting them is a bit of a PITA but doesn't really take too long...

Received this last night in response to my mailing the i-bonds on March 23:

Dear Customer,

This is a system generated email to communicate we received your Savings Bonds/Treasury Marketable Security materials. Due to the large volume of correspondence, we are experiencing, please allow 4-6 weeks to review and process your request. ...

 

[Sunset]

We will do the paper i-bond from tax refund, but once we get the paper.
I think I'll miss the 7.12 % rate due to timing.

I will hang on to them for a while and get them processed long after tax season.
I think the are crushed with activity right now..

Maybe I'll find having the paper ones is OK, and not bother converting.

 

[Chuckanut]

Received this last night in response to my mailing the i-bonds on March 23:

Ugh. I sent mine in a week earlier and have heard nothing.

Thankfully, it's only a few hundred dollars and a year's quota of I-bond purchases.

 

[HtownRose]

What do y'all think will happen to the rate on May 1? Deciding whether to buy now or wait for a better rate.

 

[Sunset]

What do y'all think will happen to the rate on May 1? Deciding whether to buy now or wait for a better rate.

Buy now, get the 7.12% for 6 months, then you get the new rate for 6 months.

Delaying for the new rate means you miss out on the 7.12% rate.

There is zero advantage to waiting. (IMHO) We put $80K in at the 7.12% so I'm putting our money where my mouth is.

 

[HtownRose]

Sounds good!

 

[EA-Sports]

Buy now, get the 7.12% for 6 months, then you get the new rate for 6 months.

Delaying for the new rate means you miss out on the 7.12% rate.

There is zero advantage to waiting. (IMHO) We put $80K in at the 7.12% so I'm putting our money where my mouth is.

So let’s say the new rate is 8%, if I put my 2022 purchase tomorrow I’ll get 7.12% for the first 6 months and then 8% for the next 6 months..are you betting that the next reset after the May one will be lower than 7.12%?

 

[Gumby]

So let’s say the new rate is 8%, if I put my 2022 purchase tomorrow I’ll get 7.12% for the first 6 months and then 8% for the next 6 months..are you betting that the next reset after the May one will be lower than 7.12%?

Whatever the November reset rate is, you'll get it PLUS the current 7.12% followed by the ~8% rate to be announced next week. If the November reset rate is higher than 7.12%, great. If it is lower than 7.12%, still great. Either way, as Mulligan explained to me earlier in this thread, better to grab that 7.12% right now. There really is no downside to doing it this month and no upside to doing it next month (Unless the Treasury should increase the I-bond fixed component from it's current 0%. But why would Treasury do that when it can still sell TIPs at a negative yield?).

 

[pb4uski]

Buy now, get the 7.12% for 6 months, then you get the new rate for 6 months.

Delaying for the new rate means you miss out on the 7.12% rate.

There is zero advantage to waiting. (IMHO) We put $80K in at the 7.12% so I'm putting our money where my mouth is.

+1 We'll have $115k in at the 7.12% rate.

(2021, 2022, 2023 gift, 2024 gift) for each of DW and me, $5k tax refund and 3 trusts (his, hers and ours)

 

[finnski1]

+1 We'll have $115k in at the 7.12% rate.

(2021, 2022, 2023 gift, 2024 gift) for each of DW and me, $5k tax refund and 3 trusts (his, hers and ours)

Nice way to play it.
Have a few question on the gifts.

It appears you are able to buy the 10k gifts for each other now (thus gaining over the 10k individual limits) but able to pick a future date for the "delivery". How far out can you go? Is it just the 2 years that you did? Also, if so, can you for example buy another 10k gift after Jan 1 2023 and say deliver it for 2025?
Also I assume since you purchased it now (even though not gifted) you still gain all the advantage of the current interest rate. I'm pretty certain that's what you did.
After you do a gift purchase. Is there a prompt that asks you when you want it delivered and that is how you get them out 2 years in advance?
Sorry for all the dumb questions. Still a bit of an I bond rookie. So far have only done the 2 $10k individual purchases for DW and me.

 

[pb4uski]

You can buy as much in gifts as you want to, but keep in mind that gifts delivered count towards one's $10k/year allocation, so for us $10k is locked up until 1/1/2023 and another $10k is locked up until 1/1/2024 and that's as much as I cared to do.

OTOH, the 7.12% accretion rate starts right away as does the minimum one-year holding period and the 5-year holding period to avoid the 3-month early withdrawal penalty.

The gifts are in the giftee's name (and in our case with me as the secondary beneficiary) but are in the grantor's TD account. I'm pretty sure that you can't schedule delivery of the gifts for a later date but that you have to go in and "deliver" the gifts later.

 

[USGrant1962]

Nice way to play it.
Have a few question on the gifts.

It appears you are able to buy the 10k gifts for each other now (thus gaining over the 10k individual limits) but able to pick a future date for the "delivery". How far out can you go? Is it just the 2 years that you did? Also, if so, can you for example buy another 10k gift after Jan 1 2023 and say deliver it for 2025?
Also I assume since you purchased it now (even though not gifted) you still gain all the advantage of the current interest rate. I'm pretty certain that's what you did.
After you do a gift purchase. Is there a prompt that asks you when you want it delivered and that is how you get them out 2 years in advance?
Sorry for all the dumb questions. Still a bit of an I bond rookie. So far have only done the 2 $10k individual purchases for DW and me.

The quick answer is they go into the "gift box" in your respective Treasury Direct accounts without specified delivery dates. Then when you want to actually transfer them you go into your gift box and enter the giftee's TD account number.

And yes, they begin collecting interest upon purchase - even sitting in your gift box.

These two (amateurish) official TD videos are helpful:
https://www.treasurydirect.gov/indiv/tools/purchasing-a-gift-bond.htm
https://www.treasurydirect.gov/indiv/tools/delivering-a-gift-bond.htm

 

[finnski1]

You can buy as much in gifts as you want to, but keep in mind that gifts delivered count towards one's $10k/year allocation, so for us $10k is locked up until 1/1/2023 and another $10k is locked up until 1/1/2024 and that's as much as I cared to do.

OTOH, the 7.12% accretion rate starts right away as does the minimum one-year holding period and the 5-year holding period to avoid the 3-month early withdrawal penalty.

The gifts are in the giftee's name (and in our case with me as the secondary beneficiary) but are in the grantor's TD account. I'm pretty sure that you can't schedule delivery of the gifts for a later date but that you have to go in and "deliver" the gifts later.

OK. thank you.