Sell I Bonds....or not?

Sold some today. Money is transferred to my checking account in 2-3 days. Nothing stays at TD.
 
Sunset said:
Thanks for the reminder.

What happens when you do sell, it the $$$ in your treasury direct account immediately ?
Click to expand...

You can either have money sent to your linked bank account in 2-3 days or have the proceeds go into your Treasury Direct 0% C of I account where it doesn't earn interest but can be used for other TD purchases.

I haven't used C of I so I don't know whether it is immediate or not.
 
Sold half of mine, purchased 1/1/22. Will sell the other half, purchased 1/1/23 in April next year.

Thinking I’ll move the cash to a CD for now.
 
I didn’t know there was a Treasury Direct cash account. I’ve always done bank transfers which execute following day.
 
RetireAge50 said:
Just sold all my ibonds. Done with treasury direct.
Click to expand...


I still like what I-bonds do for my portfolio. So, they are just one more tax-torpedo in my future (along with on-fire Megacorp stock, 401(k), taxable savings/MFs, etc.) I'm concentrating on reducing my 401(k) right now by taking more than RMDs. In the old days, I did this to turn the money into Roths but now, it's just increasing "taxable" funds and giving to kids/charities that I emphasize. "Death and taxes, baby, death and taxes." YMMV
 
I'm wondering am I reading this correctly. Since I will lose 3 months of interest when selling the I bond, is Oct 1 or Nov 1 the better time to sell a bond when the issue date is 01-01-2022 ?

https://eyebonds.info/ibonds/10000/ib_2022_01.html

<edit>
I've gone to Treasury Direct, and for the same bond it says the value is:
01-01-2022 3.38% $10,000.00 $11,208.00

So to me this looks like the value as of July 1, while earning 6.84% , meaning I should wait until Nov 1 to cash out so I only lose 3 months of low 3.38% interest :confused:

Unless of course Treasury Direct is just being slow to update their valuation ?

What do people think :confused:
 
Last edited:
Sunset said:
I'm wondering am I reading this correctly. Since I will lose 3 months of interest when selling the I bond, is Oct 1 or Nov 1 the better time to sell a bond when the issue date is 01-01-2022 ?

https://eyebonds.info/ibonds/10000/ib_2022_01.html

<edit>
I've gone to Treasury Direct, and for the same bond it says the value is:
01-01-2022 3.38% $10,000.00 $11,208.00

So to me this looks like the value as of July 1, while earning 6.84% , meaning I should wait until Nov 1 to cash out so I only lose 3 months of low 3.38% interest :confused:

Unless of course Treasury Direct is just being slow to update their valuation ?

What do people think :confused:
Click to expand...


I'm assuming TD is up to the minute on their posting, but I have no experience to say that. Just makes sense that they would be but YMMV.
 
Sunset said:
I'm wondering am I reading this correctly. Since I will lose 3 months of interest when selling the I bond, is Oct 1 or Nov 1 the better time to sell a bond when the issue date is 01-01-2022 ?

https://eyebonds.info/ibonds/10000/ib_2022_01.html

<edit>
I've gone to Treasury Direct, and for the same bond it says the value is:
01-01-2022 3.38% $10,000.00 $11,208.00

So to me this looks like the value as of July 1, while earning 6.84% , meaning I should wait until Nov 1 to cash out so I only lose 3 months of low 3.38% interest :confused:

Unless of course Treasury Direct is just being slow to update their valuation ?

What do people think :confused:
Click to expand...

Treasury Direct shows the interest through the end of June, which was at 6.48%. It does not show interest for July, August or September, because you lose those months due to the fact that there is a last three month interest penalty if you hold for less than 5 years. You have exhausted your 6.48% interest. If you held until Nov 1, you would get one month of interest at 3.38% (the interest for July). I sold my 1/1/22 issue date I-Bond today, because I can put the money in something earning more than 3.38%



Just to clarify, you earn interest on an I-Bond for the month only if you hold it on the last day of a month. It is credited to your account the next day.
 
Last edited:
Sunset said:
I'm wondering am I reading this correctly. Since I will lose 3 months of interest when selling the I bond, is Oct 1 or Nov 1 the better time to sell a bond when the issue date is 01-01-2022 ?

https://eyebonds.info/ibonds/10000/ib_2022_01.html

<edit>
I've gone to Treasury Direct, and for the same bond it says the value is:
01-01-20223.38% $10,000.00$11,208.00

So to me this looks like the value as of July 1, while earning 6.84% , meaning I should wait until Nov 1 to cash out so I only lose 3 months of low 3.38% interest :confused:

Unless of course Treasury Direct is just being slow to update their valuation ?

What do people think :confused:
Click to expand...


I had some of the same issue date bonds. $11,208 was my payout also. This matched closely with what I calculated (using 6 months each of 7.12%, 9.62%, and 6.48%).
 
While the 3.4% right now is low, I'm holding out at least a few more months to see what the next reset is. Based on the 4 months already in CPI, plus guesses for the next few, I am guessing the new reset will be 4.5%-5.0%. If that turns out to be true, I will likely just hold the I-bonds for another 6 months, because even though I can do a bit better with a MMF or other bond, the I-bonds are still a good hedge in case inflation takes off again. For example, if I am receiving a rate that is say 1% less than the market rate (of a MMF or alternative bond) for 6 months, that's a pretty cheap insurance premium to pay for the right to keep inflation protection on these I-bonds for awhile. Its challenging to get any significant money into I-bonds, but easy to take the money out. I like the deferred tax and compounding nature of the I-bonds. So, I'm letting them ride a bit longer until we see if inflation is really extinguished. In the 1970s inflation bounced up and down a few times over a long period of time. Don't know what will happen this time, but having some money in I-bonds (even at a slightly below market rate) seems like a cheap inflation hedge to me. Also, if the fixed portion moves up closer to TIPS rates starting November, I may add more I-bonds at that time (or redeem some old ones and buy new ones with the higher fixed rate). I just feel like there is lots of optionality and its a cheap hedge.
 
Gumby said:
Treasury Direct shows the interest through the end of June, which was at 6.48%. It does not show interest for July, August or September, because you lose those months due to the fact that there is a last three month interest penalty if you hold for less than 5 years. You have exhausted your 6.48% interest. If you held until Nov 1, you would get one month of interest at 3.38% (the interest for July). I sold my 1/1/22 issue date I-Bond today, because I can put the money in something earning more than 3.38%



Just to clarify, you earn interest on an I-Bond for the month only if you hold it on the last day of a month. It is credited to your account the next day.
Click to expand...

Exactly. I sold my 1/1/22 I-Bond yesterday on October 1st.
 
Thanks for reminding me to do the quarterly interest paid lookup. I’d better add that to my calendar reminders.
 
karel said:
While the 3.4% right now is low, I'm holding out at least a few more months to see what the next reset is. Based on the 4 months already in CPI, plus guesses for the next few, I am guessing the new reset will be 4.5%-5.0%. If that turns out to be true, I will likely just hold the I-bonds for another 6 months, because even though I can do a bit better with a MMF or other bond, the I-bonds are still a good hedge in case inflation takes off again. For example, if I am receiving a rate that is say 1% less than the market rate (of a MMF or alternative bond) for 6 months, that's a pretty cheap insurance premium to pay for the right to keep inflation protection on these I-bonds for awhile. Its challenging to get any significant money into I-bonds, but easy to take the money out. I like the deferred tax and compounding nature of the I-bonds. So, I'm letting them ride a bit longer until we see if inflation is really extinguished. In the 1970s inflation bounced up and down a few times over a long period of time. Don't know what will happen this time, but having some money in I-bonds (even at a slightly below market rate) seems like a cheap inflation hedge to me. Also, if the fixed portion moves up closer to TIPS rates starting November, I may add more I-bonds at that time (or redeem some old ones and buy new ones with the higher fixed rate). I just feel like there is lots of optionality and its a cheap hedge.
Click to expand...

I bond inflation adjustment is Sep CPI-U/Mar CPI-U. March 2023 CPI was 301.836 September CPI 2023 will be known next week. Suppose it is 308.1 (it was 307.026 for August, so that is 4.2% inflation from August to September if annualized). Then, the Nov 1st inflation adjustment will be 308.1/301.836 = 1.0208, which is a 4.16% APR.

To get up to 4.5% for the inflation adjustment, September CPI would have to come in at 308.627, which would mean inflation between August and September of 6.3% (annualized). I think that is extremely unlikely.
 
karel said:
While the 3.4% right now is low, I'm holding out at least a few more months to see what the next reset is. Based on the 4 months already in CPI, plus guesses for the next few, I am guessing the new reset will be 4.5%-5.0%. If that turns out to be true, I will likely just hold the I-bonds for another 6 months, because even though I can do a bit better with a MMF or other bond, the I-bonds are still a good hedge in case inflation takes off again. For example, if I am receiving a rate that is say 1% less than the market rate (of a MMF or alternative bond) for 6 months, that's a pretty cheap insurance premium to pay for the right to keep inflation protection on these I-bonds for awhile. Its challenging to get any significant money into I-bonds, but easy to take the money out. I like the deferred tax and compounding nature of the I-bonds. So, I'm letting them ride a bit longer until we see if inflation is really extinguished. In the 1970s inflation bounced up and down a few times over a long period of time. Don't know what will happen this time, but having some money in I-bonds (even at a slightly below market rate) seems like a cheap inflation hedge to me. Also, if the fixed portion moves up closer to TIPS rates starting November, I may add more I-bonds at that time (or redeem some old ones and buy new ones with the higher fixed rate). I just feel like there is lots of optionality and its a cheap hedge.
Click to expand...

If you have some I-bonds paying at fixed rate of 0% + inflation , you could sell one, and immediately buy a new one (assuming you haven't already bought 2023) which would pay a fixed rate of .9% + inflation.
Basically upgrade one of them.

If married then you can do unlimited upgrades by buying gifts (stays in your gift box) for each other.
 
An important question is whether you think the fixed rate will stay the same, decrease or increase for Nov 1. Let's say it remains the same, at 0.9%, which would give a composite rate of slightly over 5%, starting on November 1st. If that were the case, I would wait until next April to buy, because my gift box is full through 2025, so anything I buy will not be redeemable until January 1, 2026. In the interim, alternatives will likely fall as the Fed eases off.
 
But why not just ditch Treasury Direct and buy TIPS (in a tax deferred account to avoid the "phantom" income)?

I would think you could get similar economic benefits without having to endure Treasury Direct. Less restrictions and more flexibiity too.
 
We're holding onto what we have bought, but not purchasing any more. What we own is only about 3% of our assets, not enough to worry about especially since we lose 3 months of interest if we sell.
 
jldavid47 said:
We're holding onto what we have bought, but not purchasing any more. What we own is only about 3% of our assets, not enough to worry about especially since we lose 3 months of interest if we sell.
Click to expand...

But if you cash out and reinvest at 4.51% or more you are whole after a year.

4.51%*9/12 = 3.38%

And it is gravy after that.
 
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