Why Aren't I-Bonds Getting More Attention?

[Sunset]

I wanted to test out buying DW a gift of $10k on top of her own $10k. They do ask for her acct # to deliver it to. So far it seems to have worked.

Next, I'll try to do the same for my acct... From DW's acct.

As long as you don't deliver it, you can buy as many gifts as you want. But the delivery counts towards a person's $10K limit.

This means gifts can only be dispensed at $10K per year, so DW and I bought for each other 3 years worth of gifts, each was $10K. These are sitting in the giftbox in our accounts waiting to be delivered in future years.
If we decided now to pull all the money out of Treasury direct, it would take 2023,2024, 2025, to accomplish it.

 

[Earl E Retyre]

OK, I finally got the I-Bonds purchase to work.

In DW's case it worked like SueJ mentioned above. That is, DW did not receive the email with her account number so she selected "forgot my account number", re-entered her information and then immediately got the email.

When I tried the same, it did not work for me and indicated that I needed to call. So, today I phoned and the automated message said there was a 2+ hour wait due to high call volume. I was at the 90 minute point on my hold and lo and behold, I receive the account number email. So, I hung up the phone and all is fine. I have no idea what pushed the email though. I wonder if there are people in the back office looking for these errors and manually pushing the emails through.

Anyway, we purchased our first $10k each today which should fund tomorrow. Assuming that works, we will then buy the $10k gift for each other as others are doing. I actually have an LLC, which I think would allow me to purchase another $10k. However, it is a pass through entity (schedule C) so I am not sure. I think to be safe, I will just stick with the $40k unless someone knows if a pass through LLC qualifies.

Thanks to all for all the information on I-bonds. I previously had no idea but these seem to be an unbelievable good deal right now. I only wished we could put more in.

 

[daylatedollarshort]

TIPS currently have real yields and no annual limits.

 

[Done]

I actually have an LLC, which I think would allow me to purchase another $10k.

Yes it would. The Finance Buff blog has a thorough series of posts on the mechanics of I-bonds including “Buy I Bonds for Your Business.”

 

[Sunset]

.... However, it is a pass through entity (schedule C) so I am not sure. I think to be safe, I will just stick with the $40k unless someone knows if a pass through LLC qualifies.

....

Yes it qualifies, as an entity account. This also means it is basically limited to the $10K/yr and cannot have a beneficiary nor gift bonds.

As someone said, look at the website quoted above.

 

[NomDeER]

Yep, absolutely no problem cashing them at my local savings and loan, and they do not do it often. Yep, started buying them in 2001. Wished I had several hundred thousand in them but getting there. Interesting how just one month's difference in purchase date can make a huge difference in the total value after compounding over a 20 plus year period. No state taxes, but the federal taxes can be challenging when cashing out. Whatever they were meant to be, they can serve as a moderating hedge against a declining equities market. They are what they are.

What is it that makes federal taxes a challenge when cashing out?

And how exactly do you cash out if you buy online?

 

[JoeWras]

What is it that makes federal taxes a challenge when cashing out?

And how exactly do you cash out if you buy online?

Most people wait to report the interest when they cash a bond. (There is a way to do it year by year, but it can be complicated.) So, if someone has "several hundred thousand" in bonds and they cash them out, they likely have several 10 thousand in income. This can be a challenge for taxes because you might run into cliffs and inflection points.

If you buy online, you press a box ("REDEEM") and sell it. Savings Bonds can be sold through TD after certain requirements are met. Depends on the bond type, but usually requires holding it 1 year.

TIPS, Notes and Treasury Bonds are different and require transferring to a brokerage to sell.

 

[Sue J]

Beneficiary vs Joint Owner......

I bought an I Bond in my name. DH is also buying one in his name. I went to the Registration area of mine to add DH as my Beneficiary. Then I saw Primary owner with 2nd owner.

If I change mine to me as Primary and DH as secondary, does that affect him buying one in his own name? If he's my beneficiary that means after I die, where him as a 2nd owner means he could access if if I'm incapacitated.

Can we each have one with one of us as owner and the other as secondary - meaning one as Me+DH and the other as DH+me? Each one would be $10,000.

Or should I just stick with Beneficiary?

 

[Done]

Beneficiary vs Joint Owner

Yes, you can hold bonds as You+DH and he can hold as DH+You. Naming someone as the second owner or beneficiary doesn’t affect their annual purchase limit. A second owner can be granted transaction rights but a beneficiary cannot transact. Here is an article describing the differences.

 

[Sue J]

Yes, you can hold bonds as You+DH and he can hold as DH+You. Naming someone as the second owner or beneficiary doesn’t affect their annual purchase limit. A second owner can be granted transaction rights but a beneficiary cannot transact. Here is an article describing the differences.

Thank you! Your link answered all my questions.

 

[Archman]

Beneficiary vs Joint Owner......

Yes, you can hold bonds as You+DH and he can hold as DH+You. Naming someone as the second owner or beneficiary doesn’t affect their annual purchase limit. A second owner can be granted transaction rights but a beneficiary cannot transact. Here is an article describing the differences.

That's what we did.

 

[pb4uski]

Streaming CNBC today and they had Suze Orman on advocating for i-bonds.

https://www.cnbc.com/2022/06/09/suze-orman-no-1-investment-tip-for-right-now-the-series-i-bond.html

 

[jollystomper]

Streaming CNBC today and they had Suze Orman on advocating for i-bonds.

Wow, I think that is the first "celebrity" of any ilk to mention I-Bonds in the "mainstream" media. And only what, a year after I-Bonds rates started to jump?

I am waiting to see celebrity ads for I-Bonds air as frequently as celebrity ads for crypto .

 

[Gumby]

Wow, I think that is the first "celebrity" of any ilk to mention I-Bonds in the "mainstream" media. And only what, a year after I-Bonds rates started to jump?

I am waiting to see celebrity ads for I-Bonds air as frequently as celebrity ads for crypto .

Does this mean it's time to cash in?

 

[JBTX]

The strategy was discussed at length in the other, very long I-Bond thread here https://www.early-retirement.org/forums/f28/the-i-bond-thread-113668.html

But I'll recap:

In Dec 2021, the young wife and I each purchased $10k for our own account.
In Jan 2022, we each purchased $10k for our own account
In Feb 2022, we each purchased $10k as a gift for each other, to be delivered on 1/1/23.
In Mar 2022, we each purchased another $10k gift to be delivered on 1/1/24
In Apr 2022, we each purchased yet another $10k gift to be delivered on 1/1/25.

So a total of $100k for the two of us. For the first six months, each of those bonds will earn at a rate of 7.12%, for the next six months at a rate of 9.62%, for an annual return of 8.54% the first year. Yes, one must consider the 3 month early redemption penalty and the annual limits that cause the last of the gifts to be tied up until 1/1/25, but all-in-all, it is a very substantial return for minimal effort.

We have done something similar. Last 2 years
$40k regular purchase
$20k RLT
$20k self employment business
$20k in gift box to each other for future years.

I will likely buy another $20 for giftbox before November to lock in more at 9.62%.

 

[jollystomper]

Does this mean it's time to cash in?

Good point. IBonds aren't touted because there is no way to market them and make money. A the celebrity commercial script would more likely go like this:

"Yes, you have invested in I Bonds due to their current returns. But do you know there a better investment that will outpace the IBonds in the long run? Let me tell you about <shakes magic 8 ball>..."

 

[JoeWras]

Good point. IBonds aren't touted because there is no way to market them and make money. A the celebrity commercial script would more likely go like this:

"Yes, you have invested in I Bonds due to their current returns. But do you know there a better investment that will outpace the IBonds in the long run? Let me tell you about <shakes magic 8 ball>..."

Great point.

So maybe Suz is making money on books and other stuff, and just trying to get her name out there again?

 

[prudent_one]

For me, the many stories on various sites talking about problems getting accounts open, hours-long phone waits, accounts locked for dubious reasons, Medallion signature guarantees, etc. is what drove me to avoid anything to do with Treasury Direct. I saw a story somewhere where TD locked someone's account and didn't even notify them. I'm at a point in life where a few dollars doesn't outweigh a lot of aggravation. The tolerance for nonsense is shrinking all the time.

 

[madatrub]

For me, the many stories on various sites talking about problems getting accounts open, hours-long phone waits, accounts locked for dubious reasons, Medallion signature guarantees, etc. is what drove me to avoid anything to do with Treasury Direct. I saw a story somewhere where TD locked someone's account and didn't even notify them. I'm at a point in life where a few dollars doesn't outweigh a lot of aggravation. The tolerance for nonsense is shrinking all the time.

Me and SO had no issues with account set up, funding, or gifting. I'd call my experiences with TD website pleasant and efficient.

 

[Gumby]

I also found the TD account set up and subsequent I-bond purchase process to be simple and easy.

 

[steelyman]

People will always find something to complain about.

 

[pb4uski]

I also found the TD account set up and subsequent I-bond purchase process to be simple and easy.

+1 But not particularly intuitive... just need to be careful and go slowly.

 

[jollystomper]

For me, the many stories on various sites talking about problems getting accounts open, hours-long phone waits, accounts locked for dubious reasons, Medallion signature guarantees, etc. is what drove me to avoid anything to do with Treasury Direct. I saw a story somewhere where TD locked someone's account and didn't even notify them. I'm at a point in life where a few dollars doesn't outweigh a lot of aggravation. The tolerance for nonsense is shrinking all the time.

You always hear of it when someone has a problem or a frustration. You will rarely hear frm any of the many, many more who had no issues. It is kind of like traffic news, if all goes smoothly silence, when there is a crash it is broadcast everywhere. Don't let the problems of relatively few discourage you from proceeding.

 

[gregorit]

"Yes, you have invested in I Bonds due to their current returns. But do you know there a better investment that will outpace the IBonds in the long run? Let me tell you about <shakes magic 8 ball>..."

I hope that was a joke, there are any number of investment categories that outpace inflation "in the long run".

 

[BooBoo]

“In the long run we are all dead”