The I Bond Thread

[xlf11]

Question. If I purchased an Ibond on 11/30/21, my interest would change to the 3.38% on May 1st and the earliest I should sell the bond would be August 1st. Is that correct?

Yes, according to the link:
https://eyebonds.info/ibonds/home10000.html

 

[Sunset]

It may be that my understanding of the rules is incorrect (wouldn’t surprise me). For 2023 I have already bought $20K worth: $10K each for an individual and an entity (trust) account. I think that’s the limit. I’m OK with waiting till ‘24 and letting things sit. I suppose I just don’t get all jazzed about I Bonds. Or I’m lazy. [emoji4]

You have it correct.
Since DW and I delivered a gift to each other, we have used up our 2023 10k limit, so any further purchases have to be gifts for each other, locked up for a few years.

Except for my entity, which can basically exchange one for a 0.9% fixed rate one.

 

[SJhawkins]

I’m glad I have what I have and they’ve met my goal (takes a while, given purchase limits).

This may not exactly belong in this thread but what is your goal? Something I have been trying to wrap my head around.

As it stand now we have 2-3 years of living expenses in Ibonds, could stretch that to 4 years if all heck happens.

Another thought, if the market is somewhat sane, cap gains + dividends then sell some ibonds for 8-10 years would make a nice bridge to SS.

Current thinking is to just buy $10k in lieu of our normal $20k, upgrade some of those old 0% ones etc. Not exactly sure where to stop buying but think we are close.

You are right, takes some time to build a pile of Ibonds!

 

[steelyman]

This may not exactly belong in this thread but what is your goal? Something I have been trying to wrap my head around.

As it stand now we have 2-3 years of living expenses in Ibonds, could stretch that to 4 years if all heck happens.

Seems like a fine question for this thread to me. This thread has tons of good information on the topic.

My goal is simple, I think. My I Bond holdings represent 1 year of a 3 year emergency fund. Each year is not expenses, but what I call “target annual income”. That target is 85% of my highest annual gross salary when employed. That’s pretty vague but I’d read several times that people should shoot to replace 70-80% of their income in retirement, so I went conservative.

I adjust the target annually for 3% inflation (also just a guess).

 

[audreyh1]

It is simply part of my long-term investment cash allocation.

 

[Gumby]

It is simply part of my long-term investment cash allocation.

Same here.

 

[SJhawkins]

It is simply part of my long-term investment cash allocation.

That's good way too, makes sense.

 

[Fermion]

Getting close to 7 weeks on our mailing in of paper bonds and yet no update on conversion. Definitely not very liquid. I have sold houses faster than this.

 

[Chuckanut]

Getting close to 7 weeks on our mailing in of paper bonds and yet no update on conversion. Definitely not very liquid. I have sold houses faster than this.

I would call. That’s too long.

 

[jj]

I would call. That’s too long.

They say it takes 13 weeks, so I wouldn't worry yet.

As to the 'not being able to get your money out quickly', you do realize that I bonds are not redeemable under 12 months? Except in exceptional circumstances.

 

[Free bird]

Same here.

Can you still take paper ibonds into a bank or credit union & cash them?

 

[Cat-tirement]

Getting close to 7 weeks on our mailing in of paper bonds and yet no update on conversion. Definitely not very liquid. I have sold houses faster than this.

Earlier this spring I mailed in a paper bond for conversion from my tax refund, and it took about 8 weeks. I was getting a little concerned when it finally showed up in my account.

 

[lawman]

Can you still take paper ibonds into a bank or credit union & cash them?

I was unable to find one hence the reason I converted.

 

[ychuck46]

7 weeks is not too long

I would call. That’s too long.

No, it isn't. My last one took a little over two months. Pretty standard for government work.

 

[DuluthGA]

+1

 

[aja8888]

I bonds ($10 K each purchase) were purchased on 10/25/2021 and 1/10/2022. What month this year would be the best me to get out of them and take advantage of higher rates elsewhere?

 

[Gumby]

I bonds ($10 K each purchase) were purchased on 10/25/2021 and 1/10/2022. What month this year would be the best me to get out of them and take advantage of higher rates elsewhere?

7/1/23 for the first and 10/1/23 for the second. That way, you'll capture the 6.48% rate for the full period.

 

[imbatman]

I find this chart super helpful:

https://www.treasurydirect.gov/files/savings-bonds/i-bond-rate-chart.pdf

Basically if you purchased in 2021 and 2022 and sell in 2023, you lose the LAST three months of earned interest, so you probably would rather give up your 3 months of interest earned at the lower 3.38% rate.

I have always been a little unclear on the date purchase/ date rate change but appears @Gumby has that all mastered, presumably from this chart:

https://www.treasurydirect.gov/savings-bonds/i-bonds/i-bonds-interest-rates/

 

[BlueberryPie]

Interest for July is paid on the 1st of the month regardless of the day of the month of the purchase date, so you can sell at any time in July

 

[aja8888]

7/1/23 for the first and 10/1/23 for the second. That way, you'll capture the 6.48% rate for the full period.

I find this chart super helpful:

https://www.treasurydirect.gov/files/savings-bonds/i-bond-rate-chart.pdf

Basically if you purchased in 2021 and 2022 and sell in 2023, you lose the LAST three months of earned interest, so you probably would rather give up your 3 months of interest earned at the lower 3.38% rate.

I have always been a little unclear on the date purchase/ date rate change but appears @Gumby has that all mastered, presumably from this chart:

https://www.treasurydirect.gov/savings-bonds/i-bonds/i-bonds-interest-rates/

Thanks folks, I also forgot about that linked table being avaiable.

 

[aja8888]

Interest for July is paid on the 1st of the month regardless of the day of the month of the purchase date, so you can sell at any time in July

Thanks!

 

[audreyh1]

Interest for July is paid on the 1st of the month regardless of the day of the month of the purchase date, so you can sell at any time in July

I think you have to hold for a whole month to get that month’s interest. So if you sell in July, for example, you won’t get July interest, even if you sell on the last day. So you need to wait to sell August 1 to get July’s interest.

The example in #1767 is capturing the interest for June and September (which is then forfeit as 1 of the 3 lower yield months).

 

[imbatman]

I believe an October bond will change to new interest on April 1st (instead of May, everyone changes at 6-month frequencies from issue month). So @Gumby will have the 3.38% for April, May, and June....and can sell July 1st and keep all the 6.48% months.

 

[pb4uski]

I bonds ($10 K each purchase) were purchased on 10/25/2021 and 1/10/2022. What month this year would be the best me to get out of them and take advantage of higher rates elsewhere?

7/1/23 for the first and 10/1/23 for the second. That way, you'll capture the 6.48% rate for the full period.

According to eyebonds an I bond purchased in Oct 2021 would pay 6.48% through the end of September 2023, and would pay 3.38% beginning October 1, 2023, so wouldn't the best time to redeem that I bond be Jan 1, 2024 rather than July 1, 2023?

If redeems in July 2023 he forfeits 3 months at 6.49%, but if he waits until Jan 2024 he forfeits 3 months at 3.38%.

I agree with Oct 2023 for the Jan 2022 purchase.

$10,000 I Bond October 2021
$10,000 I Bond January 2022

 

[imbatman]

Ha ha geez this is amusing and not like we are dumb and uninformed people.

- We know the RATE changed on May 01, 2023
- We know October issued bonds change rates on April 01 and October 01 (per the "Interest rate changes depend on when we issued the bond" table)

What was unclear to me was how to determine which of two dates will inherit the May rate change. Logically, October is the first date AFTER the May rate change. In which case it would be January 01, 2024. IDK, never heard of that eyebonds website but have no reason to doubt it (seems to be their specialty ha ha).