Ibond Journey

[SJhawkins]

Thinking back a bit on our Ibond journey and some random thoughts.

We starting buying ibonds in 2012 as place to just toss some extra dollars, more tax advantaged space, a place to move the emergency fund to, etc. All the usual suspects one thinks about when starting to buy them.

Fast forward a few days from now and will pick up another $20k for 2022. That will put the total just north of $100k in ibonds.

Now that it's been 10 years from the start of buying these, thinking what are we going to do with them has changed. We don't really have an emergency fund anymore, total portfolio is the emergency fund. More tax advantage space is nice.

This may not make much sense but I'm looking more and more at these as a "poor person's anuity" as sorts. We don't spend a ton, add a $1,000/month from the ibonds to my SS and that would be a decent living for us, so 8-10 years are covered.

Ibonds make up about 5% of our assets but yet they seem to make me feel the most warm and fuzzy inside for reasons that really make no sense based on the engineer in me.

Getting a tad older and knowing that the $100k we have now in ibonds will have the same spending power or close to it 10-20 years from now is not the reason we started to buy them but it's todays feeling.

We are early 50's now, enjoy our work most days, unsure if/when we will retire. By the numbers I guess we are FI. If we work another 5 years and pick up another $100k in ibonds that would make a nice place to jump into the retirement pool at 57-58.

The above is just some random thoughts and our ibond journey. It's interesting in how differently we look at things after just 10 years. The reason we started to buy ibonds really don't match the reasons of why we are buying them now.

 

[steelyman]

Nice post! I’ve “solved” the problem of not needing an emergency fund by relabeling it to “emergency/LTC” (long term care). I Bonds seem to fit well there for me.

 

[Dash man]

We’ll be just shy of yours at about $96k total when we purchase another $20k of iBonds next week. We first bought iBonds in 2000, but only $100 a pop. Our highest current interest on iBonds is over 10% on one and a number over 9%, but none are high denominations. Our $10k maximum purchases began in 2018, but not every year. We definitely look at them differently today than we did early on.

 

[SJhawkins]

Nice post! I’ve “solved” the problem of not needing an emergency fund by relabeling it to “emergency/LTC” (long term care). I Bonds seem to fit well there for me.

I suppose in another 10 or 20 years that could be our plan too.

The more I try to plan 20-30 years out the more I realize it's mostly just an exercise, think just a WAG maybe good enough. When I look at our first "Investment Policy Statement" lot has changed from 20 years ago!

 

[PaunchyPirate]

I just started my journey this month and will add another $10k after NewYear’s. I wish I knew about them 20 years ago, as I could have invested in them all this time.

I view the money as part of my cash reserves/fixed income. But I’m also putting my niece as the beneficiary on them. I’m single. She has graciously agreed to be my estate executor upon my death. Should I not need the money to live my long life, I view the bonds as her “little something extra” for the eventual work she will be doing upon my death.

 

[steelyman]

I suppose in another 10 or 20 years that could be our plan too.

The more I try to plan 20-30 years out the more I realize it's mostly just an exercise, think just a WAG maybe good enough. When I look at our first "Investment Policy Statement" lot has changed from 20 years ago!

Sure, I understand and agree.

Maybe the slight viewpoint difference helps me to avoid thinking the money is just sitting there (rather than making millions in some high flying stock). I guess I think it really is a savings bond (emphasis “savings”). I don’t think much about it once deposited.

 

[big-papa]

I only wish I had known more about them earlier instead of ignoring them. Anyway, for a number of years now, we've been buying the max amount: $10K for me, $10K for her on the first of the year and then $5K per year from tax refund. I never had time to do it this year but in the new year, we'll create and add an RLT for another $10K. We basically plan on continuing to add to the pile for the foreseeable future.

Goal here for us is to make it a COLA'd adder to SS when we start taking it at age 70.

Cheers
big-papa

 

[SJhawkins]

I only wish I had known more about them earlier instead of ignoring them. Anyway, for a number of years now, we've been buying the max amount: $10K for me, $10K for her on the first of the year and then $5K per year from tax refund. I never had time to do it this year but in the new year, we'll create and add an RLT for another $10K. We basically plan on continuing to add to the pile for the foreseeable future.

Goal here for us is to make it a COLA'd adder to SS when we start taking it at age 70.

Cheers
big-papa

I have thought about doing the $5k refund tax return deal for a number of years just have been to Lazy!

To make the ibond program easier to maintain they could nix the whole paper tax ibond return and just raise the purchase limit but what do I know

 

[big-papa]

I have thought about doing the $5k refund tax return deal for a number of years just have been to Lazy!

To make the ibond program easier to maintain they could nix the whole paper tax ibond return and just raise the purchase limit but what do I know

My guess is that somewhere along the line they must have printed too many paper Ibonds.

Really wish I knew about Ibonds long before the $10K per individual limitation was imposed. Apparently it was done with very little warning back when it happened.

 

[steelyman]

My guess is that somewhere along the line they must have printed too many paper Ibonds.



Really wish I knew about Ibonds long before the $10K per individual limitation was imposed. Apparently it was done with very little warning back when it happened.

I don’t think it’s much of a concern. Today’s nice composite rate was not always the case and will change. Slow and steady is good.

 

[big-papa]

I don’t think it’s much of a concern. Today’s nice composite rate was not always the case and will change. Slow and steady is good.

Actually I'm not at all concerned about that happening again. I only wish I knew about Ibonds wat back then when they had a significantly higher fixed rate and really good composite rates. Apparently back then it was common to purchase large amounts on a credit card and also receive significant amounts of cash back or points if your card had such a feature...