I bonds

[retiredunder50]

Cashing paper I bonds is not a joy. One needs to fill out the info on the back and sign. It's a trivial level of effort except when you are doing it for 40-60 bonds at a time for tuition payments. The credit union tellers panic when when they see me because it takes them nearly an hour to process the stack of bonds. Like you, I'm also still keeping the 'high' fixed rate ones until they mature - who could have guessed that locking in on fixed rates of 3.x% + y% inflation component would be better than CDs, savngs, checking,... and even a market index for a long period of time (http://savings-bond-advisor.com/i-bonds-versus-the-stock-market/)?

 

[burch64]

I sold a bunch of I-Bonds in 2005 that had a fixed rate of 1%. But who knew at that time that 1% plus inflation would be good rate of return.

 

[Koolau]

Cashing paper I bonds is not a joy. One needs to fill out the info on the back and sign. It's a trivial level of effort except when you are doing it for 40-60 bonds at a time for tuition payments. The credit union tellers panic when when they see me because it takes them nearly an hour to process the stack of bonds. Like you, I'm also still keeping the 'high' fixed rate ones until they mature - who could have guessed that locking in on fixed rates of 3.x% + y% inflation component would be better than CDs, savngs, checking,... and even a market index for a long period of time (http://savings-bond-advisor.com/i-bonds-versus-the-stock-market/)?

Heh, heh, one of the reasons I quit purchasing I-Bonds was that our last batch, purchased in person at my credit union, took over an hour to purchase - including the time 3 levels of CU employee had to spend figuring out the process. I'm sure you are right that the paper process to cash is a real pain as well. BUT, I can hold the paper in my hands and don't have to count on some gummint web site to make it all work. IIRC, even if you hold paper, you can STILL use the gummint web site to cash them (I know you can look them up on line to determine their current value because I did that - once.) YMMV

 

[ShokWaveRider]

I am sitting on PenFed 3% CDs till 2019

 

[brewer12345]

I am sitting on PenFed 3% CDs till 2019

Heh, 5% until 2021.

 

[FIREd]

Heh, 5% until 2021.

Ditto. I can't believe I have been holding those CDs for nearly 6 years already. Time flies!

 

[brewer12345]

Ditto. I can't believe I have been holding those CDs for nearly 6 years already. Time flies!

I keep hoping the idiots that run that place will make similar mistakes again soon...

 

[HtownRose]

"I-Bonds are so flexible - allowing you to "titrate" how much taxable money you want to receive since only the gain is taxed."

I'd like to hear more on this. Please & thank you!

 

[jazz4cash]

Heh, 5% until 2021.

High Five!!!

 

[Koolau]

"I-Bonds are so flexible - allowing you to "titrate" how much taxable money you want to receive since only the gain is taxed."

I'd like to hear more on this. Please & thank you!

Let's say you suddenly need $50K in cash (maybe a downpayment on vacation house.) You have $150K in face value I-Bonds with 3 different maturity dates. Each maturity date has a different amount of accrued interest. Let's say batch one was the oldest and the $50K face now is worth $100K. Batch two has $50K face now worth $75K and Batch three is very recent (over one year old) and is worth $52K. If you are in a very low tax bracket, you might choose to use some or all of your oldest I-Bonds (maybe cash in $50K leading to $25K taxable.) But say you are on the "line" between the 15% bracket and the 25% bracket. You cash in the newer bonds and have a taxable "event" of less than $2K. You can play this among the three batches to "titrate" the amount of taxable income you are willing to receive in a given year, thus paying the tax rate you desire. Naturally, this isn't foolproof, but it does give you options if you have bought a series of different maturity I-Bonds such as I have.

YMMV

 

[zesty]

I have stopped buying I-Bonds as they pay virtually no interest anymore and also because the interest calculation depends on a rigged system which certainly does not reflect MY inflation rate - not even close.

LOL, let me guess - shadowstats?

 

[Golden sunsets]

I purchased I bonds from the beginning of the program until 2011 as the fixed rate components had decayed to nothing from a high of about 3.6%. The inflationary component has some of the early bonds still yielding around 6% which is always income tax free in the state and federal income tax free for qualified education expenses. This was a decent, stress-free way to save towards the kids' college education; now, not so much.

Does anyone know if "qualified education expenses" include grandchildren?


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[RE2Boys]

Qualified education expenses of you, spouse, and any children you can claim as a dependent on that year's tax rerun.

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[HtownRose]

Good stuff ~ thank you! I wish I had bought the smallest available denominations so as to be able to spread out the taxes.

 

[Golden sunsets]

Qualified education expenses of you, spouse, and any children you can claim as a dependent on that year's tax rerun.

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Oh darn. Thanks.

 

[Golden sunsets]

The I-bond inflation component should be 2.76% effective November 1.

March 2016 CPI-U was 238.132. September 2016 CPI-U was 241.428, for a semi-annual increase of 1.38%.

With my 1% fixed rate from my max $30,000 purchase each for DH and I in 2006 that means the new rate will be 3.7738. That's the highest rate since the 11/11 to 5/12 period. I'll take it. I've also resisted buying more since the fixed rate dropped and the max purchase dropped to $5K pp.

 

[MooreBonds]

Good stuff ~ thank you! I wish I had bought the smallest available denominations so as to be able to spread out the taxes.

Don't forget that you can redeem just part of one bond:

What is the minimum amount allowable for a redemption?Only an account owner, or a grantee with Transact rights, can redeem an EE or I Bond. If you are partially redeeming an EE or I Bond, you must redeem at least $25, and may not leave less than $25 of redemption value as the remainder of the held security.
...
What is the difference between a partial and full redemption?
A partial redemption is when an account owner redeems a portion of the security. The amount requested includes principal, as well as a proportionate amount of interest. The account owner must redeem at least $25, and may not leave less than $25 as the remainder of the held security. A full redemption includes both the principal and the total interest earned.
Is there a minimum amount that must remain in the EE or I Bond when I make a partial redemption?
Yes. You must leave no less than $25 in redemption value as the remainder of the held security when making a partial redemption.

Source: https://www.treasurydirect.gov/indiv/help/TDHelp/faq.htm

 

[RE2Boys]

I don't think partials apply to paper bonds, which is all I have at this time

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[MooreBonds]

I don't think partials apply to paper bonds, which is all I have at this time

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All you would have to do is simply ask...but if you want to simply assume and take that approach, no skin off my back....

 

[Tortoise]

I don't think partials apply to paper bonds, which is all I have at this time

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You can convert your paper i-bonds to electronic bonds in TreasuryDirect. This would then allow the partial withdrawals already discussed.

Individual - Convert Your Paper Savings Bonds Using SmartExchange

 

[RE2Boys]

You can convert your paper i-bonds to electronic bonds in TreasuryDirect. This would then allow the partial withdrawals already discussed.

Individual - Convert Your Paper Savings Bonds Using SmartExchange

Thanks for the helpful info, Tortoise.
I've been procrastinating converting mine to electronic form, really do not want to keep track of another online account but will need to deal with it eventually. It is just so much easier to stop by my bank with the existing paper and get my money. Just did some Series EE this week. I've got bonds maturing from this month to 2032 with three different beneficiaries or co-owners two of them deceased.

 

[razztazz]

Thanks for the helpful info, Tortoise.
I've been procrastinating converting mine to electronic form, really do not want to keep track of another online account but will need to deal with it eventually. It is just so much easier to stop by my bank with the existing paper and get my money. Just did some Series EE this week. I've got bonds maturing from this month to 2032 with three different beneficiaries or co-owners two of them deceased.

Oh man, I could have written this myself. Yes thank you masked man for the info.

I have been noodling with the idea of converting to electronic but didn't seem worth the trouble plus, I'm up to here with online accounts, passwords, secret questions and answers etc.

But my problem is when I bought those I-Bonds I didn't want to fill out all the paperwork for dozens of $1,000.00 bonds, so I bought fewer large denominations.

Now if I want any money I have to cash in the heavies and pay a wampus amount of taxes. If I had known about the partial redemption I'd have converted sooner.