The I Bond Thread

[wallygator69]

The clock starts on the [-]day [/-] month of purchase.

Sorry this is important.....so I could could sell it June of 2023.


Thx again,


Wally

 

[Dash man]

I don't think you can gift as a couple. I-bonds are purchased by individual entities. But you could buy $5,000 and your wife could buy $5,000 for each of your kids and then gift them, so your end result is still $10,000 to each kid.

This is incorrect. The gift can come from a joint account for the couple. The daughter’s name will be on the iBond registration. A single $10,000 iBond is fine. The key is to not give the daughter more than $10,000 in iBonds in a single calendar year. Each parent can gift up to $16,000/year to the daughter for up to $32,000 total without filing a gift tax return. It can be done jointly.

 

[Dash man]

Sorry this is important.....so I could could sell it June of 2023.


Thx again,


Wally

If you purchased an iBond on June 1, 2022, it can be redeemed one year later, but there will be a three month interest penalty until you hold the bond for five years.
If you buy a gift iBond for your daughter on June 1, 2022, gift it to her on January 1, 2023, she (not you) can redeem the bond on June 1, 2023.

 

[MissMolly]

This is incorrect. The gift can come from a joint account for the couple. The daughter’s name will be on the iBond registration. A single $10,000 iBond is fine. The key is to not give the daughter more than $10,000 in iBonds in a single calendar year. Each parent can gift up to $16,000/year to the daughter for up to $32,000 total without filing a gift tax return. It can be done jointly.

According to this site: https://tipswatch.com/2021/05/09/ready-to-open-a-treasurydirect-account-here-are-some-tips/


"A married couple must open two separate TreasuryDirect accounts if both spouses wish to purchase I Bonds. Each account is limited to purchasing $10,000 per person per calendar year, so if you want to purchase $20,000 in a year, you need two accounts."

 

[Dash man]

According to this site: https://tipswatch.com/2021/05/09/ready-to-open-a-treasurydirect-account-here-are-some-tips/





"A married couple must open two separate TreasuryDirect accounts if both spouses wish to purchase I Bonds. Each account is limited to purchasing $10,000 per person per calendar year, so if you want to purchase $20,000 in a year, you need two accounts."

You’re missing the point. That site is referring to each spouse purchasing an iBond for themselves. If they’re purchasing a gift iBond for their daughter only one of them needs a TD account to buy the $10,000 gift iBond. The money can come out of a joint account to purchase the gift iBond. Yes, it can be purchased and stored in the Gift inbox of one of the individual parent’s TD accounts, but the funds to buy that iBond still comes from a joint account making it from both of them with no reason to buy two separate $5,000 iBonds.

 

[MissMolly]

You’re missing the point. That site is referring to each spouse purchasing an iBond for themselves. If they’re purchasing a gift iBond for their daughter only one of them needs a TD account to buy the $10,000 gift iBond. The money can come out of a joint account to purchase the gift iBond. Yes, it can be purchased and stored in the Gift inbox of one of the individual parent’s TD accounts, but the funds to buy that iBond still comes from a joint account making it from both of them with no reason to buy two separate $5,000 iBonds.

Well, I didn't take that as the point. I understood the point to be that they wanted to have a joint I-bond account. Of course money can be taken from a joint savings/checking account. I don't see that as being the question.

 

[beowulf]

I’m not sure how the daughter will cash the gifted I bond without a treasury direct account. It will sit in your gift box (? - not sure of right term) until it moves to the daughter’s account. I don’t understand how the daughter could cash it while it resides in the parent’s account. Same with gifting an I bond to a spouse. They need to have a separate account. And the year it’s transferred to that other account, it will prevent the purchase of other I bonds by that person (assuming it’s $10K). Am I misunderstanding previous posts here?

 

[MissMolly]

I’m not sure how the daughter will cash the gifted I bond without a treasury direct account. It will sit in your gift box (? - not sure of right term) until it moves to the daughter’s account. I don’t understand how the daughter could cash it while it resides in the parent’s account. Same with gifting an I bond to a spouse. They need to have a separate account. And the year it’s transferred to that other account, it will prevent the purchase of other I bonds by that person (assuming it’s $10K). Am I misunderstanding previous posts here?

No, you are not misunderstanding.

 

[Dash man]

I’m not sure how the daughter will cash the gifted I bond without a treasury direct account. It will sit in your gift box (? - not sure of right term) until it moves to the daughter’s account. I don’t understand how the daughter could cash it while it resides in the parent’s account. Same with gifting an I bond to a spouse. They need to have a separate account. And the year it’s transferred to that other account, it will prevent the purchase of other I bonds by that person (assuming it’s $10K). Am I misunderstanding previous posts here?

She can’t. It has to be gifted into a TD account in her name, then she can redeem it one year after original purchase.
You’re correct about not being able to purchase an iBond if gifted a $10k iBond that calendar year.

 

[Gumby]

You’re missing the point. That site is referring to each spouse purchasing an iBond for themselves. If they’re purchasing a gift iBond for their daughter only one of them needs a TD account to buy the $10,000 gift iBond. The money can come out of a joint account to purchase the gift iBond. Yes, it can be purchased and stored in the Gift inbox of one of the individual parent’s TD accounts, but the funds to buy that iBond still comes from a joint account making it from both of them with no reason to buy two separate $5,000 iBonds.

You can buy as many gift bonds as you like. You just can't deliver more than $10,000 to any one recipient in any one year. I bought $30k in gift bonds for the young wife this year. I will deliver them to her $10k at a time on 1/1/23, 1/1/24 and 1/1/25. Since the first gift bond I bought for her was in February 2022, she'll need to hold it for one month after I deliver it to her on 1/1/23. Then she could redeem it. She has done the same for me. We did that to take advantage of the high I-Bond rates now.

 

[11522914]

This is exactly what we did. Except we only bought for 2023 & 2024.

Ran out of cash. [emoji3525]

 

[cyber888]

IBond Prediction for November 2022 is around 8.4%

The video discusses the math and the range for the Nov. iBonds and concludes it is around the 7.8% - 8.6% range, with 8.4% as the most probably number. She drops the 8.4% number around 6:49 minutes of the video.

 

[Gumby]

I disagree.

The November 2022 I-bond rate is calculated as follows:

((CPI Sep 22/CPI Mar 22) - 1)x 200) = new APR

CPI March 2022 was 287.504. CPI August 2022 was 296.171. If CPI stayed exactly the same in September 22 as it was in August 22, the new rate would be ((296.171/287.504)-1) x 200) = 6.03% APR.

Now, let's look at what CPI could reasonably be expected to be in September 2022. The September 2021 CPI was 274.310. If reported annual inflation is 8.0% for September, then CPI Sep 2022 would be 296.245 (274.310 x 1.08 = 296.255), which would make the new rate ((296.255/287.504)-1)x200) = 6.09 % APR.

In fact, for the November I-bond rate to be 8.4%, then the September 2022 annual inflation rate would need to be 9.2%. You can determine this by reversing the above equations:

((8.4/200)+1)x 287.504) = 299.579 >>> this would be the required Sept CPI to make the November I bond rate 8.4%.

299.579/274.310 = 1.092, so year over year inflation would have to run at 9.2% in September. And month over month inflation would then be 1.2% from August to September. (299.579/296.171 = 1.012). I find that unlikely. In fact, the highest month to month inflation over the past year has been only 1.3% May to June.

These guys forecast September CPI to be 297.1, which would make the annual inflation rate in September 8.3% and would make the November I bond rate 6.68% APR. They have proven to be close to the mark in the past (maybe a little high).
https://tradingeconomics.com/united-states/consumer-price-index-cpi

 

[Gumby]

It appears that Barron's agrees with me.

https://www.barrons.com/articles/i-bond-new-rates-november-51663365393?siteid=yhoof2

One of the best current deals in the bond market—Treasury Series I savings bonds—is likely to get less attractive in November when a new rate on the popular investments is set. Individual investors may want to snap up the inflation-linked I bonds before the end of October to get the current 9.6% interest rate for the first six months. The new rate, applying to bonds purchased in November, is likely to be closer to 6%, Barron’s estimates, based on the formula used by the U.S. Treasury to calculate the semiannual rate.

 

[cyber888]

If you're right, I hope it won't fall below 6.68% .. that's still a good rate.

For those adding ibonds in October, if combine with 6 months of 9.62%, + 6 months of 6.68%, that would still be a yearly rate above 8%. I'll take it.

I disagree.

The November 2022 I-bond rate is calculated as follows:

((CPI Sep 22/CPI Mar 22) - 1)x 200) = new APR

CPI March 2022 was 287.504. CPI August 2022 was 296.171. If CPI stayed exactly the same in September 22 as it was in August 22, the new rate would be ((296.171/287.504)-1) x 200) = 6.03% APR.

Now, let's look at what CPI could reasonably be expected to be in September 2022. The September 2021 CPI was 274.310. If reported annual inflation is 8.0% for September, then CPI Sep 2022 would be 296.245 (274.310 x 1.08 = 296.255), which would make the new rate ((296.255/287.504)-1)x200) = 6.09 % APR.

In fact, for the November I-bond rate to be 8.4%, then the September 2022 annual inflation rate would need to be 9.2%. You can determine this by reversing the above equations:

((8.4/200)+1)x 287.504) = 299.579 >>> this would be the required Sept CPI to make the November I bond rate 8.4%.

299.579/274.310 = 1.092, so year over year inflation would have to run at 9.2% in September. And month over month inflation would then be 1.2% from August to September. (299.579/296.171 = 1.012). I find that unlikely. In fact, the highest month to month inflation over the past year has been only 1.3% May to June.

These guys forecast September CPI to be 297.1, which would make the annual inflation rate in September 8.3% and would make the November I bond rate 6.68% APR. They have proven to be close to the mark in the past (maybe a little high).
https://tradingeconomics.com/united-states/consumer-price-index-cpi

 

[beowulf]

6% on a totally risk free investment ain't chopped liver. I'll take it unless someone knows of something better. The current TSP G Fund rate is 3.375. Also risk free, but no where near the rate of the I Bonds.

 

[mystang52]

I think that sometimes we all get so caught up in getting the best rate we lose perspective. I Bonds are a great asset in one's investment mix. It's a Cash equivalent (for all intents and purposes), so its return will always be less than likely return of long term equities holdings. Sure, I'd love to get 9+% again at the next rate change, but if it ends up being 6 or 7% that's still pretty darned good, and I'm pretty certain it's the best rate for Cash equivalent.

 

[Chuckanut]

I would love the I-bond rate to be 1.6%, because that means inflation is done ravaging my savings and investments.

IMHO, I-bonds are nothing more than a strategic retreat in the face of an enemy that is mercilessly advancing through my territory, destroying buildings, crops, livestock etc. The goal is survive so as to fight back when the enemy falters for whatever reason.

 

[Gumby]

I would love the I-bond rate to be 1.6%, because that means inflation is done ravaging my savings and investments.

IMHO, I-bonds are nothing more than a strategic retreat in the face of an enemy that is mercilessly advancing through my territory, destroying buildings, crops, livestock etc. The goal is survive so as to fight back when the enemy falters for whatever reason.

The Fabian strategy.

 

[BlueberryPie]

Rob Berger predicts 6.03%

I'd trust his math. Not chopped liver, but I decide to do the gift-bond purchase ahead to lock in the current rate for 6 months, the 6% rate for another 6, and I can decide what to do next.

I have several years of iBonds that are liquid atm, so not worried about locking $20K with the current move.

Currently, my liquid iBonds cover my emergency fund (6 months basic expense) but if I get one more $20K purchase I'd have 1 year of normal (not basic) expenses once they're liquid. Not willing to buy more atm. In fact, I probably would be better off investing in the current stocks "on sale" but having plenty of iBonds is part of what allows me to sleep well at night, knowing that I should be OK even if we get a recession and I lose my job.

 

[jldavid47]

The video discusses the math and the range for the Nov. iBonds and concludes it is around the 7.8% - 8.6% range, with 8.4% as the most probably number. She drops the 8.4% number around 6:49 minutes of the video.

You misunderstood what she said. Her prediction for the November I-Bond rate was 5.9%-7.6%. She correctly stated that the November-April rate would be 6% if the index remained the same in October. The 7.8%-8.6% range was the blended annual rate if you bought I-Bonds today combining the current 6-month rate with the projected next 6-month rate.

 

[Gumby]

Rob Berger predicts 6.03%
....

To touch on an issue he raised in his video, gasoline prices have fallen 5.7% in the four weeks from 8/22/22 to 9/19/22. I don't expect a big change in the next week. So that has a moderating effect on inflation.


https://www.eia.gov/petroleum/gasdiesel/

 

[copyright1997reloaded]

I just finished funding my child's I-Bonds for the year to grab the current 9+% six-month rate.

These deals are costing me money.

 

[Murf2]

I just finished funding my child's I-Bonds for the year to grab the current 9+% six-month rate.

These deals are costing me money.

I’ve seen this mentioned before. Do you get the rate you buy at for 6 months?

Sorry for the dumb ?. I’ve just started paying attention to the I bonds.

Thanks
Murf

 

[Sunset]

I’ve seen this mentioned before. Do you get the rate you buy at for 6 months?

Sorry for the dumb ?. I’ve just started paying attention to the I bonds.

Thanks
Murf

Yes. Then every 6 months it sets to the new rate.