Why Aren't I-Bonds Getting More Attention?

[bookman51]

No.
Just buy a $10K gift for your wife, and she buys a $10K gift for you.
Each leaves it in the gift box.
It earns interest and the current great rate, and ages like any other bond all while in the gift box. It can sit there years.

Beyond the annual 10K limit for each of us.
DW and I have bought gifts for each other of $30K , to be delivered in 2023, 2024, 2025
We also overpaid our income taxes by $5K, and got a $5K i-bond as the refund for 2022.

I have to make quarterly estimated tax payments. I usually try to avoid lending the federal government for free. However, if the Series I interest rates stay high, it looks like well worth overpaying on taxes so one will get a large enough return to get the $5K Series I purchase benefit. Thanks

 

[LarryMelman]

+1. They don’t do much for most retirement nest eggs.

I don't know why you'd say that, since the 401K contribution limit is around 25K nowadays. An easy place to park 10K is significant.

For those of us that like to use idle cash chasing bank account bonuses and such, the current i-bond rates are a no-brainer.

 

[Mulligan]

Why 16k? Gift tax? If so, you can buy more and then just each file Form 709.



Or get married.

Hey PB, No, I dont like paperwork, and after 16 years we got a good thing going and dont want to ruin it by getting married, lol..Besides I get her insurance for free, and she gets my house if I die, so no need to tie the knot, ha.

 

[bookman51]

No.
Just buy a $10K gift for your wife, and she buys a $10K gift for you.
Each leaves it in the gift box.
It earns interest and the current great rate, and ages like any other bond all while in the gift box. It can sit there years.

Beyond the annual 10K limit for each of us.
DW and I have bought gifts for each other of $30K , to be delivered in 2023, 2024, 2025
We also overpaid our income taxes by $5K, and got a $5K i-bond as the refund for 2022.

I will say I tried it this afternoon, and I checked the gift box. However, I do not see anything about delivery date. I get the bad feeling that I just purchased $10,000 as a gift for my wife for this year, and she is already maxed out for 2022. I tried calling the TreasuryDirect number, but at 2:30 CDT they were not taking any more calls today because of such a backlog. I certainly have seen easier webpages to use. I am retired, but I have a Ph.D. and also a masters in instructional design. I am curious as to the design process this page went through. Was there any pilot testing? Or, are they just field testing it for a few million people like myself to muddle through? Oh Well.

 

[pb4uski]

Gifts don't have years attached to them so you are ok. Your gift will sit in your gift box with your wife's name on it until you deliver it to her. It uses up her $10k allowance when delivered, NOT when purchased. So if you wait until 2023 to deliver the gift to her it will count against her 2023 allowance.

And yeah, the website is pretty primitive and not at all intuitive, but that's the US government for you.

 

[bookman51]

Gifts don't have years attached to them so you are ok. Your gift will sit in your gift box with your wife's name on it until you deliver it to her. It uses up her $10k allowance when delivered, NOT when purchased. So if you wait until 2023 to deliver the gift to her it will count against her 2023 allowance.

And yeah, the website is pretty primitive and not at all intuitive, but that's the US government for you.

Thanks very much. Makes me rest easier

 

[gregorit]

Why I don't buy I-Bonds, YMMV:

* Too much administrative work to acquire and monitor.
* Striving for inflation-like returns seems... silly.
* Relatively terrible liquidity.
* Severe constraints on supply, the $ caps are ridiculous, even accounting for the dodgy workarounds.
* Waste of time monitoring such a tiny % portfolio allocation.

And, no, I'm not one of those guys who picks up pennies on the sidewalk, especially when they're covered with asphalt and bubblegum, like these I-Bonds are.

 

[Sconie]

I've been buying I-Bonds for the last several years-----but back to the question as to why they don't get more attention? I-Bonds are not necessarily easy to purchase and---possibly most importantly---no "financial representative," certified or otherwise, earns a commission from their purchase or subsequent redemption.

 

[bookman51]

Why I don't buy I-Bonds, YMMV:

* Too much administrative work to acquire and monitor.
* Striving for inflation-like returns seems... silly.
* Relatively terrible liquidity.
* Severe constraints on supply, the $ caps are ridiculous, even accounting for the dodgy workarounds.
* Waste of time monitoring such a tiny % portfolio allocation.

And, no, I'm not one of those guys who picks up pennies on the sidewalk, especially when they're covered with asphalt and bubblegum, like these I-Bonds are.

I do not understand your reservations. I have been purchasing them since 2001. Easy to buy and many times over the years the interest rates exceeded inflation rate and certainly CD rates and never a zero return. I just had problems today with trying to gift them ahead. I have had no problems cashing them in at my local savings and loan. I will agree that the annual $ caps are too low. There is not much monitoring to be done. Probably every few months I check to see what the interest rates are doing but mostly they are just sit and forget investments. As far as a small % of portfolio, that is an individual thing. Given what has happened to equities over the past few months, and especially this week, they look pretty good. I have some now drawing more than 10% and my recent purchases now more than 9%. And, for me, boring can be good. Not trying to start anything, but I would think for most small investors, they are a good solid addition to a portfolio.

 

[steelyman]

I don’t think it’s too hard to monitor I bonds current value. They only change monthly and you can update less frequently if you like. I do it manually as I’m not aware of any auto-update/download features. I only buy once or twice a year and then forget it.

 

[bookman51]

I've been buying I-Bonds for the last several years-----but back to the question as to why they don't get more attention? I-Bonds are not necessarily easy to purchase and---possibly most importantly---no "financial representative," certified or otherwise, earns a commission from their purchase or subsequent redemption.

When I purchased some last November and then again in January, I probably spent 30 minutes do so each time at most. Seems pretty easy to me, particularly when I plan to hold them for years. Today I was frustrated with trying to purchase them as gifts to be assigned later. I found the website not very good in doing that. When I mention the Series I interest rates to banker friends of mine, they have no comment. Either they think I am beyond hope or they have no better options. I would like to think the latter. So bankers and stockbrokers have no interest in pushing them. And I took my investments away from any commissioned folks a long time ago. For all the time they supposedly spent and experience they supposedly had, they were not doing better than I was when I selected indexed mutual funds, and I lost their commission right off the top. They are a modest boring investment but right now I have some doing 10% plus and 9% plus interest. Works for me.

 

[gregorit]

I do not understand your reservations. I have been purchasing them since 2001. Easy to buy and many times over the years the interest rates exceeded inflation rate and certainly CD rates and never a zero return. I just had problems today with trying to gift them ahead. I have had no problems cashing them in at my local savings and loan. I will agree that the annual $ caps are too low. There is not much monitoring to be done. Probably every few months I check to see what the interest rates are doing but mostly they are just sit and forget investments. As far as a small % of portfolio, that is an individual thing. Given what has happened to equities over the past few months, and especially this week, they look pretty good. I have some now drawing more than 10% and my recent purchases now more than 9%. And, for me, boring can be good. Not trying to start anything, but I would think for most small investors, they are a good solid addition to a portfolio.

I'd agree, for most small investors they could be a solid addition. I'm not a large investor compared to what I've seen others talking about on these forums but even with a $100K in these it would be < 1% of my portfolio. Speaking for myself, there is no way could I justify the time and effort associated with these instruments to get inflation or even CD-like returns. Even the dumbest and most boring broad market index funds would outperform I-Bonds over the long-haul. (I-Bonds were meant to hedge against inflation, by their very definition, not a declining equity market.)

 

[Landolink]

I look at ER infrequently. But for the luv of God they are being discussed in my neck of the woods. A glazed look is what I usually get. Wall Street doesn’t get paid for I bonds. They get paid for structured notes though.

 

[JJpop]

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.

Until you have been buying them for 20 years and they have compounded and some are now earning 12 and 13 pct.

A 10,000 bond bought in 2001 is now worth almost 29,000 and will earn about 11 pct over the latest 12 month period.

There are a lot of people who have several hundred thousand in IBonds earning a very high rate presently.

 

[bookman51]

Until you have been buying them for 20 years and they have compounded and some are now earning 12 and 13 pct.

A 10,000 bond bought in 2001 is now worth almost 29,000 and will earn about 11 pct over the latest 12 month period.

There are a lot of people who have several hundred thousand in IBonds earning a very high rate presently.

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.

 

[Bruceski44]

Until you have been buying them for 20 years and they have compounded and some are now earning 12 and 13 pct.



A 10,000 bond bought in 2001 is now worth almost 29,000 and will earn about 11 pct over the latest 12 month period.



There are a lot of people who have several hundred thousand in IBonds earning a very high rate presently.

$10,000 ---> $29,000 over 21 years, with interest compounded semi-annually (as I-Bonds are) is 5.1% annual interest. Not bad, but not great. There are many other investments which would have returned multiples of that over the same period, albeit with somewhat higher risk. Given 0% fixed rate, variable rates which only track inflation (according to government CPI-U numbers anyway), purchase limits and limited liquidity, it's just not worth more than about 5% allocation exposure to me.

 

[bookman51]

$10,000 ---> $29,000 over 21 years, with interest compounded semi-annually (as I-Bonds are) is 5.1% annual interest. Not bad, but not great. There are many other investments which would have returned multiples of that over the same period, albeit with somewhat higher risk. Given 0% fixed rate, variable rates which only track inflation (according to government CPI-U numbers anyway), purchase limits and limited liquidity, it's just not worth more than about 5% allocation exposure to me.

The purchase limits are only a factor if one sees them as so attractive one wants to purchase a lot more but it is not a reason to purchase up to the limits. One does have to hold them for a year. They are not a place to put funds if one wants to change investments frequently. I put them in the stable, buy and hold portion of a portfolio with "not bad" return. In looking, I have some drawing 11.72% right now and some at 10.23%. In the short term, that is better than "not bad." In the long term, who knows. Looking back, it is easy to find investments that have done better, but I can also find companies that existed twenty years ago that no longer exist. Picking investments going forward is more of a challenge. Finally, I do not see much exposure at all to risk, unless inflation would really go crazy quickly, and then returns on Series I would be among the least of our problems. Series I bonds are something no one is going to get rich on NOR go broke on. I see them as a stable core that one invests in and then leaves it alone. The 5% limit may work fine for you, and it is not too far off for me. However, a good allocation percentage is so dependent on individual situations. With a healthy portfolio, it may be hard even to get to that 5%; with lots of expenditures and limited resources, Series I are probably not a good choice for large portion of a portfolio. So the answer is, as it often is, "It depends."

 

[JoeWras]

This thread is going to go down as one of the weirdest day 1 troll threads of all time.

Maybe mdbrown (Doc Brown?) came back from the future and is giving us a subtle warning to stock up on i-Bonds, even if you think they are an administrative pain and have terrible liquidity, etc.

 

[pb4uski]

Why I don't buy I-Bonds, YMMV:

* Too much administrative work to acquire and monitor.
* Striving for inflation-like returns seems... silly.
* Relatively terrible liquidity.
* Severe constraints on supply, the $ caps are ridiculous, even accounting for the dodgy workarounds.
* Waste of time monitoring such a tiny % portfolio allocation.

And, no, I'm not one of those guys who picks up pennies on the sidewalk, especially when they're covered with asphalt and bubblegum, like these I-Bonds are.

So if you haven't bought i-bonds then what is your opinion informed by?

1. Negiligible admin work once you have your account set up and that takes all of 10 minutes.
2. Forget inflation... what do you have readily available to day that will be 9.64% for the next 6 months? Minimum of 4.7% yield for one year hold and minimum of 2.75% for 20 month hold... do the math.
3. Totally liquid after 12 months of ownership so I'm not sure that you know what you are talking about. Can redeem anytime after 12 months... 3 month early withdrawal penalty if owned less than 5 years but 3 months is much better than most CDs.
4. I agree, but there are work arounds that help.
5. DW and I have bought $135k since November 2021 and can buy $50k annually between the two of us and three trusts.

 

[pb4uski]

...with a $100K in these it would be < 1% of my portfolio. ...

Well, if I had a portfolio of over $10 million then I might not bother with them either. No humble brag though, eh? I'm starting to wonder if Larry is right.

However, TIPs add inflation yielding ballast to your portfolio and can be bought in large quantities and once you get beyond 2028 the real yields are positive and could be considered.

 

[RetireBy90]

Thanks to this site I bought first one last month. We had a CD maturing and it was this or .40%. I don't spend lots of time searching for better returns on the taxable cash but I didn't find anything close to the return. Almost all of our stash is in IRAs and using lots of it paying taxes on Roth conversions. Still even a $10K over 1 year is worth it to me. I'm a cheap date I guess.

 

[JJpop]

I'd agree, for most small investors they could be a solid addition. I'm not a large investor compared to what I've seen others talking about on these forums but even with a $100K in these it would be < 1% of my portfolio. Speaking for myself, there is no way could I justify the time and effort associated with these instruments to get inflation or even CD-like returns. Even the dumbest and most boring broad market index funds would outperform I-Bonds over the long-haul. (I-Bonds were meant to hedge against inflation, by their very definition, not a declining equity market.)

Well the 1 percenters out there do not need to worry about such trivial things as IBonds, tips, CD’s, or bonds of any kind.
Also the time and effort is obviously overwhelming anyway

 

[Happyras]

After reading these new posts I am getting charged up again to buy more. I bought 90K last week between DW and I, and gifts. I am now rethinking to buy more gifts out into future years for our grandkids, they could be redeemed the year they finally receive them and someone is going to get that money anyway, why not enjoy the 9.62% even more! My wife and I are covered through 2024, and I am thinking a few more years for us as well as the kido's. Those friends of mine in the <1% club have been doing this for years, I just woke up.....

 

[Mulligan]

Well the 1 percenters out there do not need to worry about such trivial things as IBonds, tips, CD’s, or bonds of any kind.
Also the time and effort is obviously overwhelming anyway

I agree with you. Clearly these were only meant for 25k income types as only these low income investing sites linked below that cater to poor people bother to even mention them.

https://www.wsj.com/articles/the-safe-investment-that-will-soon-yield-almost-10-11649769505

https://www.barrons.com/articles/yield-income-investing-i-bonds-treasury-bills-inflation-51649883065

https://www.forbes.com/sites/robert...r-historic-962-interest-rate/?sh=2d19806a41a7

 

[sengsational]

Look Backs and the Gift Box

The spouse reciprocal gifting thing is interesting, so I wondered about expanding it to a parent. Would there be any issues with doing that?