Treasury Bonds

a great rate of near 7% if it keeps up like this for another 6 months.

on the other hand, you better keep it in there for more than 5 years or you lose the last 3 months of interest payments

would you buy IBonds or just invest the $10K into your brokerage account right now?

One suggestion is to wait a few weeks, the new rates for the second half of the year should be known soon. I think that as long as you invest by early-May (don't remember the specific date) you will lock in the current rate for six months.

Ag CPA said:

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One suggestion is to wait a few weeks, the new rates for the second half of the year should be known soon. I think that as long as you invest by early-May (don't remember the specific date) you will lock in the current rate for six months.

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thanks

but I am overseas beginning on 24 April and would rather not be transferring large sums over the internet

ibonds

I placed $10,000 for me and $10,000 for my wife back in May of last year in IBonds. When they mature in May I plan to pull them out. Once I do that, am I forfeiting three month of interest, or not because I held a year?

You will lose the last 3 months of interest. In order to avoid the 3 months interest penalty, you must hold 5+ years.

Schall 02 said:

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

As i read it, bonds have to issue before April 30 to get 6 months of the 6.89% rate followed by 6 months of new rate, whatever it may be.

If you dont already have a treasury direct account start the process immediately. It can be delayed.

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Yes thanks

I think it does make sense

even though I hate creating yet ANOTHER retirement type account (I already have three different corporate 401K plus private brokerage)

on the one hand it is awesome diversification in the event one fails

on the other hand it would be nice to see the entire portfolio in one place.

I hadn't thought of keeping the IBond for a decade but since someone mentioned it- that makes a lot of sense

but the interest rate fluctuates every six months correct? so in 2 years it could be back down to 1%. is there any way to lock it in?

LMCane said:

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Schall 02 said:

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

As i read it, bonds have to issue before April 30 to get 6 months of the 6.89% rate followed by 6 months of new rate, whatever it may be.

If you dont already have a treasury direct account start the process immediately. It can be delayed.

---

Yes thanks

I think it does make sense

even though I hate creating yet ANOTHER retirement type account (I already have three different corporate 401K plus private brokerage)

on the one hand it is awesome diversification in the event one fails

on the other hand it would be nice to see the entire portfolio in one place.

I hadn't thought of keeping the IBond for a decade but since someone mentioned it- that makes a lot of sense

but the interest rate fluctuates every six months correct? so in 2 years it could be back down to 1%. is there any way to lock it in?

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No, it's variable every six months based on a set formula. It's been at historic highs in the last 2 years because of rampant inflation. If inflation levels off it's going to fall back to earth. I have $30k in two accounts. One personal and one via my LLC. Trying to gauge next interest rate round to determine if I'm going to leave it in or pull it and move to savings.

One thing with I bonds is you don't have to buy just 1 bond at 10k. You can buy 10 at 1k each. That way you can pull out smaller amounts if needed, without losing 3 months interest on all of it.

Also, I think the stock market is a reasonable choice at this point if you don't mind some ups and downs. I think in a year the market and an I bond may be on par with each other in gains, but long term potential of buying the market now is greater than buying an I bond now.

Or just split it 50 50? I've bought a couple smaller I bonds over the past few months with money leftover after I invested in the market.

bigtruckguy3500 said:

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One thing with I bonds is you don't have to buy just 1 bond at 10k. You can buy 10 at 1k each. That way you can pull out smaller amounts if needed, without losing 3 months interest on all of it.

Also, I think the stock market is a reasonable choice at this point if you don't mind some ups and downs. I think in a year the market and an I bond may be on par with each other in gains, but long term potential of buying the market now is greater than buying an I bond now.

Or just split it 50 50? I've bought a couple smaller I bonds over the past few months with money leftover after I invested in the market.

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Wasn't aware of that hack. You are buying $1k at a time within the same account then? You would have to. So they partition it automatically when you buy?

Other hacks:

• You can buy a $10K lot under your personal name and another $10K lot under your LLC.
• You can an additional $5K per year if that money is coming from a tax refund for a total of $15K in any given year on your personal account. So that's $25K right there in one year.

Based on your posting history. . . Is the juice really worth the squeeze? I heard dealing with the treasury's website is a major pita. I'd get it if you could buy 50k+ a year but at only 10k doesn't seem worth the hassle.

hypeiv said:

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Based on your posting history. . . Is the juice really worth the squeeze? I heard dealing with the treasury's website is a major pita. I'd get it if you could buy 50k+ a year but at only 10k doesn't seem worth the hassle.

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They just updated it. The password entry was wonky on the old site. That's about it that I found annoying.

YouBet said:

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bigtruckguy3500 said:

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One thing with I bonds is you don't have to buy just 1 bond at 10k. You can buy 10 at 1k each. That way you can pull out smaller amounts if needed, without losing 3 months interest on all of it.

Also, I think the stock market is a reasonable choice at this point if you don't mind some ups and downs. I think in a year the market and an I bond may be on par with each other in gains, but long term potential of buying the market now is greater than buying an I bond now.

Or just split it 50 50? I've bought a couple smaller I bonds over the past few months with money leftover after I invested in the market.

---

Wasn't aware of that hack. You are buying $1k at a time within the same account then? You would have to. So they partition it automatically when you buy?

Other hacks:

• You can buy a $10K lot under your personal name and another $10K lot under your LLC.
• You can an additional $5K per year if that money is coming from a tax refund for a total of $15K in any given year on your personal account. So that's $25K right there in one year.

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Yeah, I just make separate purchases, so I end up with multiple different I bonds in the same account. This way, if rates are better somewhere else, but I still want some diversification, I can break a few bonds and keep some in the I bonds.

I have some that I bought within the last few years. If inflation goes down such that the variable rate is zero or near zero, I'll just wait three months and cash out then. Even if you buy now, and get a relatively minimal fixed rate, three months of that will be relatively insignificant if the variable rate drops. Long story short, I wouldn't let the three month penalty play too big a role in your decision making, either the rate will stay high and you'll leave the money in for 5 years, or you'll pull it out with a low penalty.

YouBet said:

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bigtruckguy3500 said:

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One thing with I bonds is you don't have to buy just 1 bond at 10k. You can buy 10 at 1k each. That way you can pull out smaller amounts if needed, without losing 3 months interest on all of it.

Also, I think the stock market is a reasonable choice at this point if you don't mind some ups and downs. I think in a year the market and an I bond may be on par with each other in gains, but long term potential of buying the market now is greater than buying an I bond now.

Or just split it 50 50? I've bought a couple smaller I bonds over the past few months with money leftover after I invested in the market.

---

Wasn't aware of that hack. You are buying $1k at a time within the same account then? You would have to. So they partition it automatically when you buy?

Other hacks:

• You can buy a $10K lot under your personal name and another $10K lot under your LLC.
• You can an additional $5K per year if that money is coming from a tax refund for a total of $15K in any given year on your personal account. So that's $25K right there in one year.

---

I know that this has already been discussed on the other I-Bond thread but you can buy $10K annually for each member of your family, even if they are minors. I'm married with two kids so we bought $40K last April.

Ag CPA said:

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YouBet said:

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bigtruckguy3500 said:

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One thing with I bonds is you don't have to buy just 1 bond at 10k. You can buy 10 at 1k each. That way you can pull out smaller amounts if needed, without losing 3 months interest on all of it.

Also, I think the stock market is a reasonable choice at this point if you don't mind some ups and downs. I think in a year the market and an I bond may be on par with each other in gains, but long term potential of buying the market now is greater than buying an I bond now.

Or just split it 50 50? I've bought a couple smaller I bonds over the past few months with money leftover after I invested in the market.

---

Wasn't aware of that hack. You are buying $1k at a time within the same account then? You would have to. So they partition it automatically when you buy?

Other hacks:

• You can buy a $10K lot under your personal name and another $10K lot under your LLC.
• You can an additional $5K per year if that money is coming from a tax refund for a total of $15K in any given year on your personal account. So that's $25K right there in one year.

---

I know that this has already been discussed on the other I-Bond thread but you can buy $10K annually for each member of your family, even if they are minors. I'm married with two kids so we bought $40K last April.

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This too!

5 years? Taxable interest? If you don't think the stock market, which is low now, won't greatly outperform a 7% I-Bond in the next 5 years then buy all you can. I think you'll be severely disappointed but that's just me.

That's not how it works.

OldArmyCT said:

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5 years? Taxable interest? If you don't think the stock market, which is low now, won't greatly outperform a 7% I-Bond in the next 5 years then buy all you can. I think you'll be severely disappointed but that's just me.

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It's up to 30 years of inflation protection. And it's limited to $10,000 per year. Some people have asset allocations that include a portion of fixed income, and I bonds, being government issued, are considered a risk-free investment, which, of course, cannot be said for stocks. It's really a false comparison to say "just put it all in stocks," because for many people, that money has already been earmarked for a different purpose anyway. The only real question for those people is what type of bond to put those dollars into.

I haven't done it yet, but another role that I-bonds can perform is that of an emergency fund. It will always perform better than savings accounts, and as mentioned above, the 3 month penalty is largely a moot point, so it's nearly as liquid.

LMCane said:

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Ag CPA said:

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One suggestion is to wait a few weeks, the new rates for the second half of the year should be known soon. I think that as long as you invest by early-May (don't remember the specific date) you will lock in the current rate for six months.

---

thanks

but I am overseas beginning on 24 April and would rather not be transferring large sums over the internet

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I transfer a lot larger sums than this "over the internet". The risk isnt the internet, but the institution youre using

" already have three different corporate 401K plus private brokerage"

Not exactly sure what you mean here, but you can consolidate IRAs into one account as long as they are the same type of IRA.

So, the annual max here is actually quite high if you think through all scenarios. Assuming you are married with 2.4 kids:

• Husband: $10,000
• Wife: $10,000
• Kid 1: $10,000
• Kid 2: $10,000
• Husband LLC: $10,000
• Wife LLC: $10,000
• Tax Refund: $5,000

Total Potential Annual contribution: $65,000 (possibly $70,000 if you are filing taxes separately and both get a refund?)

I've used it as a complementary savings account the last two years simply to chase better yield.

YouBet said:

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So, the annual max here is actually quite high if you think through all scenarios. Assuming you are married with 2.4 kids:

• Husband: $10,000
• Wife: $10,000
• Kid 1: $10,000
• Kid 2: $10,000
• Husband LLC: $10,000
• Wife LLC: $10,000
• Tax Refund: $5,000

Total Potential Annual contribution: $65,000 (possibly $70,000 if you are filing taxes separately and both get a refund?)

I've used it as a complementary savings account the last two years simply to chase better yield.

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If you buy them in the kids' names, it is considered a gift to the kid and the kid is the owner of the bond. You can't just use their SSN's to expand your own i bond space. If you purchase bonds in the kids' names and then cash out and use the funds for your own purpose, that could cause problems on several levels.

hypeiv said:

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Based on your posting history. . . Is the juice really worth the squeeze? I heard dealing with the treasury's website is a major pita. I'd get it if you could buy 50k+ a year but at only 10k doesn't seem worth the hassle.

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Yep that is a real concern

good points

txaggieacct85 said:

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" already have three different corporate 401K plus private brokerage"

Not exactly sure what you mean here, but you can consolidate IRAs into one account as long as they are the same type of IRA.

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Hmm.. not sure they are general IRA that can be rolled.

one is my current company in a Schwab account

one is when I was a contractor which is linked to my Fidelity account

the largest is the United Technologies Corp (Raytheon now) which is it's own standalone corporate 401K

to my thinking, it's not a bad thing to be diversified even with 401K providers in case one hits an iceberg.

YouBet said:

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LMCane said:

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Treasury Bonds

a great rate of near 7% if it keeps up like this for another 6 months.

on the other hand, you better keep it in there for more than 5 years or you lose the last 3 months of interest payments

would you buy IBonds or just invest the $10K into your brokerage account right now?

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Don't let 3 mo of interest on $10K take your money hostage for 5 years. That's almost an irrelevant penalty especially if rates are on par with other savings vehicle in the next go round.

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This.

The penalty is equivalent to a nice round of golf somewhere.

Any thoughts on what the next interest rate reset is gonna look like?

Here is a pretty good article:

https://keilfp.com/blogpodcast/i-bond-rate-november-2022-may-2023/

Thanks. I reset sometime this month at the 6.4% rate, so looks like I'll be cashing out at the end of the year (whenever I hit 3 months of 3% interest rate).