Why Aren't I-Bonds Getting More Attention?

mdbrown

Confused about dryer sheets
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With today's inflation rates, they seem like a great option for medium-term investing, as a hedge against inflation. Yet it seems like they're not getting much attention.
 
You can only buy 10 grand a year, so yeah, get as much as you can - :)
 
But, while my experience with it has been ok, Treasury Direct is a real PITA and if you have something that you have to call them on you can be on hold for hours.

I helped my aunt and uncle set up their accounts and didn't know that Navy Federal, where they have their savings account, doesn't play well with Treasury Direct, so their first purchase was rejected. The stupid thing is while you can set up a bank account online when you set up an account, you can't later add a bank account online, you have to do it via a paper form that requires Medallion signature... stupid.

I'm very surprised that my 89-yo aunt has persevered on all this and didn't just give up... I think that I would have.
 
My mother has some paper I bonds and has had difficulty cashing them at her bank. It seems a lot of trouble to go to when you can only invest $10,000 per year.
 
harllee; said:
My mother has some paper I bonds and has had difficulty cashing them at her bank. It seems a lot of trouble to go to when you can only invest $10,000 per year.


It’s not that difficult to send them in to convert them to electronic iBonds. I did it a few years ago. The instructions are on the TD website.
 
But, while my experience with it has been ok, Treasury Direct is a real PITA and if you have something that you have to call them on you can be on hold for hours.

I helped my aunt and uncle set up their accounts and didn't know that Navy Federal, where they have their savings account, doesn't play well with Treasury Direct, so their first purchase was rejected. The stupid thing is while you can set up a bank account online when you set up an account, you can't later add a bank account online, you have to do it via a paper form that requires Medallion signature... stupid.

I'm very surprised that my 89-yo aunt has persevered on all this and didn't just give up... I think that I would have.



Navy Federal requires any external electronic transfers to take place from their checking account. I know it’s inconvenient, but it’s stated in their instructions.
 
My mother has some paper I bonds and has had difficulty cashing them at her bank. It seems a lot of trouble to go to when you can only invest $10,000 per year.

Heck, I stop to pick up a dime I see on the ground. A few hours to earn an extra $2000 via my 2021 and 2022 Ibond purchases is a pretty good hourly wage.
 
Because I Bond limit is only 10K/yr so there is nothing much to talk about. It's not really an investment. Having said that... every investor is surely buying it... I did :)
 
Because I Bond limit is only 10K/yr so there is nothing much to talk about. It's not really an investment. Having said that... every investor is surely buying it... I did :)


They add up over time. Together we have about $130k in iBonds. Some go back to the year 2000 and are paying very nice interest rates.
 
Do many of the iBond owners here have the older paper ones? My 90 year old mother has a bunch of paper iBonds and EE bonds that she periodically cashes in for living expenses. Until this year her bank Wells Fargo would cash them for her but they will no longer cash them. I know she can mail them in to get them cashed but I have read that it takes months to get your money. For those of you who have paper bonds and want to cash them in how are you doing so?
 
Honestly, too much effort for a minimal investment of $10 or $20k a year with ~$2k return does not make a dent or make it worth the effort. If it were $100 or $500k then I would do it.
 
Honestly, too much effort for a minimal investment of $10 or $20k a year with ~$2k return does not make a dent or make it worth the effort. If it were $100 or $500k then I would do it.

The young wife and I bought $100k of I-bonds over 5 months starting in December 2021. In total, I doubt it took more than 30 minutes of my time, and the majority of that was setting up the account the first time. The cash was otherwise idle, earning 0.01% in my checking account. I think it was worth the effort to earn $8541 over one year.
 
The young wife and I bought $100k of I-bonds over 5 months starting in December 2021. In total, I doubt it took more than 30 minutes of my time, and the majority of that was setting up the account the first time. The cash was otherwise idle, earning 0.01% in my checking account. I think it was worth the effort to earn $8541 over one year.

How if there is a 10k per year per person limit? Not a lot of point in stating this without sharing how?
 
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How if there is a 10k per year per person limit? Not a lot of point in stating this without mentioning how?

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.
 
The more I think about it, the more the gift thing actually makes financial sense. Yes, the money is locked up, but it is earning 9.62%.

Is it better to have money locked up earning 9.62% or money available that is earning 1.2%?

I just wish I could purchase ibonds in IRA or 401k...
 
Thanks, it is still not really for us. I guess it would be different if it made a big difference to our Quality of life. Not knocking the strategy or others who care to do it. We would rather ladder $1m in MYGAs and CDs when rates hit my threshold. and just forget about it for 5 to 10 years. Again, this is just our opinion, and is great while the inflation rate of return stays high.

The above looks like a great deal for those who wish to do it.

Thanks for the recap.
 
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With today's inflation rates, they seem like a great option for medium-term investing, as a hedge against inflation. Yet it seems like they're not getting much attention.

Welcome mdbrown?

Honestly, your first post nearly seems like a semi-troll. As the other people have pointed out, this topic has been hot, hot, hot.

A kind suggestion. Take a browse around the forums and see what's going on. If you have a topic that interests you, there is a very good search function up above the tab bar.

Here's a recent search on "i-bond" for example:
https://www.google.com/search?q=%22i-bond%22&x=0&y=0&sitesearch=early-retirement.org

Of course, if you mean they are not getting enough attention in the local news and mainstream media, you are correct. Those outlets are too busy smearing each other and spouting their propaganda.

But all the finance forums, reddit subs, facebook groups, and so on are talking about it. I think someone starts a new -bond thread on bogleheads every 15 minutes. At least here, the new i-bond threads are about 1 per day.
 
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Do many of the iBond owners here have the older paper ones? My 90 year old mother has a bunch of paper iBonds and EE bonds that she periodically cashes in for living expenses. Until this year her bank Wells Fargo would cash them for her but they will no longer cash them. I know she can mail them in to get them cashed but I have read that it takes months to get your money. For those of you who have paper bonds and want to cash them in how are you doing so?

DW has been cashing her treasury bonds at her bank. Maybe your DM needs to use another bank to cash them ? Can you take her to your bank ?
Maybe a different Wells Fargo branch ?
 
They assure your money will keep pace with inflation, at least inflation as determined by the government. But with purchase limits and liquidity restrictions, they are not a screaming good deal. Remember, the fixed rate component is zero. How long will it be before the Treasury raises the fixed rate to match the recent Fed raises? If you hold for five years, it'll be a wash. It may seem like you're making a lot of money, but that just puts the horrendous, historic inflation in clear perspective. And when inflation returns to "normal" the returns will drop to unproductive levels. I bought the max last year and this year, but I'm not screaming about it.

With most other asset classes at frothy levels, I'd be holding a lot of cash, except for the brutal losses due to inflation.
 
DW has been cashing her treasury bonds at her bank. Maybe your DM needs to use another bank to cash them ? Can you take her to your bank ?
Maybe a different Wells Fargo branch ?

I am going to have to check around to see if Wells Fargo has eliminated cashing savings bonds at all branches or if they just did not want to do it at her branch. I am a member of a credit union and will check with them too. It just seems a lot of work to cash the bonds in.
 
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.

Thanks for sharing that, I did not know you could purchase a gift for the future calendar year and receive current interest on it.
 
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