Sell I Bonds....or not?

[bobbyr]

Yes. We have $20k of bonds in the gift box that are trapped there until 1/1/25.

thanks for the response...glad to know that.

 

[NoiseBoy]

The only consideration I'd give is if you don't want the income this year (or next year). Perhaps selling a bond would push you into the next IRMAA level, or you'll be in a lower tax bracket the following year.

Beyond that, unless you have a reason to take more income, I would sell the newest one over 5 years. It's less of a tax hit to take 5 years of I-bond income than 10.

I will sell next year as this year I'm going through the process of exchanging most of an after-tax investment in a VG Target date fund to an index fund. It's my first big movement of after-tax money since I retired so I'm learning about capital gains and losses

But, I probably would've sold my oldest 0% I bond first, so thanks for the tip to sell the youngest bond to realize the least amount of taxable interest next year. As far as buying new I bonds, I have always invested $10k in a single bond. After watching some videos, I am now thinking of investing $5k in the spring and fall to spread the rate changes out a bit.

 

[Koolau]

I redeemed one of the $1000 face I-bonds purchased in 2011 that recently were converted to electronic and got a paltry $1356

That is not a lot of gain for 12 years and most of that is from the last three years!

If inflation really is declining I can see why some people would sell.

Very much depends when you bought I-bonds. Later I-bonds mostly paid just "inflation." Earlier ones (late 90s to early 00s) paid real interest PLUS inflation. I've mentioned before that I still kick myself for not buying more back in the "good old days."


I just checked on one I bought this time of year in 2003 (exactly 20 years ago.) It's now worth almost $2100. Now, I realize, compared to "average" equities, that is also a paltry amount. BUT compared to many other "cash" savings possibilities, it's not bad. YMMV

 

[Koolau]

Heh, heh, I just realized, I only have 10 more years to hold this series of I-bonds. Otherwise - they will stop generating ANY interest or ANY inflation. Of course, I'll be 86 when that all happens - in case I make it that long.

 

[jollystomper]

There is a 52 week Treasury auction this coming Tuesday. I may sell my May 2021 I Bonds and roll the money into a 1 year treasury bill. Things to ponder over the weekend... .

No more pondering, I pulled the plug on Tuesday. Sold the I Bonds, forfeiting $96 worth of interest, and purchased the 52 week T Bill which came in at 5.351%.

 

[Love This Community]

Redeemed 22K (purchased 10K for each spouse in Dec 2021). Have another tranche to redeem in Jan 2024 (purchased in April 2022). Thank you for helpful information and the links showing optimal withdrawal times.

 

[NW-Bound]

Heh, heh, I just realized, I only have 10 more years to hold this series of I-bonds. Otherwise - they will stop generating ANY interest or ANY inflation. Of course, I'll be 86 when that all happens - in case I make it that long.

Watch out for the tax bomb when you pay for the 30-year accumulated interest.

I have the same problem (accumulated interest in the 6 figures), but I will be younger than 86 .

 

[Chuckanut]

Watch out for the tax bomb when you pay for the 30-year accumulated interest.

I have the same problem (accumulated interest in the 6 figures), but I will be younger than 86 .

I’ve been told (but never done it myself) than you can sell part of an Ibond. If so, a person might be able to sell chunks of the bond as it approaches maturity and thus avoid being thrust into higher tax brackets. I don’t know if this makes sense and could be done.

 

[Koolau]

Watch out for the tax bomb when you pay for the 30-year accumulated interest.

I have the same problem (accumulated interest in the 6 figures), but I will be younger than 86 .

Yeah, I may start cashing some in a few years ahead as there will be quite a gain.

 

[Koolau]

I’ve been told (but never done it myself) than you can sell part of an Ibond. If so, a person might be able to sell chunks of the bonds as it approaches maturity and thus avoid being thrust into higher tax brackets. I don’t know if this makes sense and could be done.

Yeah, all of ours are $1000 face, so nice bite-size chunks to cash in a few at a time within a year.

 

[audreyh1]

I’ve been told (but never done it myself) than you can sell part of an Ibond. If so, a person might be able to sell chunks of the bond as it approaches maturity and thus avoid being thrust into higher tax brackets. I don’t know if this makes sense and could be done.

Yes, this can easily be done. You just start doing partial redemptions a few years ahead.

 

[Love This Community]

Redeemed 22.4K (purchased 10K for each spouse in Dec 2021). Have another tranche to redeem in Jan 2024 (purchased in April 2022). Thank you for helpful information and the links showing optimal withdrawal times.

Got my $22,416 deposit in the bank. My treasury direct experience has been great. Seamless to open an online account, transact and withdraw. Don’t have a yardstick to compare since I started dabbling in I bonds as recently as Dec 2021

 

[pb4uski]

...My treasury direct experience has been great. Seamless to open an online account, transact and withdraw. Don’t have a yardstick to compare since I started dabbling in I bonds as recently as Dec 2021

Treasury Direct is part of the reason that I will be redeeming my I-Bonds. Having to OTA each and every time that I log on is annoying. That and we have 5 Treasury Direct accounts (his, hers, his trust, her trust and our trust) and the proceeds will all go into our joint brokerage account and the trusts will be dormant, simplifying our finances for DW and DD if I get hit by a beer truck.

 

[Love This Community]

Treasury Direct is part of the reason that I will be redeeming my I-Bonds. Having to OTA each and every time that I log on is annoying. That and we have 5 Treasury Direct accounts (his, hers, his trust, her trust and our trust) and the proceeds will all go into our joint brokerage account and the trusts will be dormant, simplifying our finances for DW and DD if I get hit by a beer truck.

Agree on the simplification part. I saw the OTA as an extra layer of protection but see your point of how it can be annoying. Had I not been part of this community, I would’ve built even more complexities in brokerages and other accounts. I am learning the lessons and trying to simplify as much as I possibly can. Will redeem my next tranche of I bonds in Jan and that’ll end my relationship with treasury direct for now. Opened up a Charles Schwab account last year chasing high interest CD’s last year. Moved it to my E*trade account but will be nice to redeem that this October and close CS account. Don’t even get me started on the funds within 401k’s. Over the last year, I tried to consolidate as much as possible into target date funds and keep it that way for future contributions.

 

[pb4uski]

I'm fine with OTA codes periodically or if one is using an public computer, but every frickin time you log in is excessive... not done at any other financial website that I use.

 

[Love This Community]

I'm fine with OTA codes periodically or if one is using an public computer, but every frickin time you log in is excessive... not done at any other financial website that I use.

Haha…thank god, I lucked out with only 2 accounts and not having to login frequently. I can see how it can be frustrating in your situation with multiple accounts and OTA’s each time.

 

[Gumby]

It takes about a microsecond longer to get the OTA code and copy it into the box. I leave 2FA on for every one of my financial websites.

 

[Koolau]

Treasury Direct is part of the reason that I will be redeeming my I-Bonds. Having to OTA each and every time that I log on is annoying. That and we have 5 Treasury Direct accounts (his, hers, his trust, her trust and our trust) and the proceeds will all go into our joint brokerage account and the trusts will be dormant, simplifying our finances for DW and DD if I get hit by a beer truck.

Is there a special account if it's not a beer truck? Maybe an old guy in an old Buick nails you and wonders what that "thump, thump" sound is. The old guy probably has to look under the steering wheel and needs his glasses changed. Be prepared for every eventuality.

 

[11522914]

It takes about a microsecond longer to get the OTA code and copy it into the box. I leave 2FA on for every one of my financial websites.

Yeah, well, those microseconds can add up to a full hour every decade or so. [emoji6]

 

[pb4uski]

Haha…thank god, I lucked out with only 2 accounts and not having to login frequently. I can see how it can be frustrating in your situation with multiple accounts and OTA’s each time.

I even have another TD account for a nonprofit that I am Treasurer of. Ugh!

 

[pb4uski]

It takes about a microsecond longer to get the OTA code and copy it into the box. I leave 2FA on for every one of my financial websites.

So you 2FA for all your financial logins EVERY time you login?

 

[Gumby]

So you 2FA for all your financial logins EVERY time you login?

Yes, I do.

 

[tulak]

Yes, I do.

Same for me.

I made this change a couple of months ago and it’s been fine.

 

[pb4uski]

Interesting. But I do like the login for the Schwab app on my phone... it does authentication using my fingerprint.

 

[11522914]

Interesting. But I do like the login for the Schwab app on my phone... it does authentication using my fingerprint.

Love the Schwab app with the fingerprint login. Only problem is you can't buy treasuries or CDs from the app. [emoji20]