I Bonds

[Sanford02]

I am surprised that there is no recent talk of I Bonds here that I could find. You have until the end of October to get the 9.62% rate for 6 months on up to $10k per person. You have to hold the bonds for 12 months, and you don't know what the rate will be for the 2nd half of that time, but even if it goes to 0% you still average 4.81%. So, if you have some idle cash waiting around for something, and you don't need it for at least a year, you might want to give I Bonds a closer look.

[ScrapMetal]

I considered it until I read the limit of $10,000.
What difference does it make if I invest $100,000 or 10 people invest the limit of $10,000? The government never makes sense in programs they provide.

[Sanford02]

I considered it until I read the limit of $10,000.
What difference does it make if I invest $100,000 or 10 people invest the limit of $10,000? The government never makes sense in programs they provide.

There are definitely quirks and limitations which prevent this from being a universally good idea for everyone, but there are scenarios where it makes a lot of sense and is better than any alternative. If you have cash parked in a bank account, and you know that you don't need it for at least a year, you could do better with I Bonds. If you have been paying extra on your 3.5% mortgage, maybe pause those extra payments for a while and make more than 3.5% with I Bonds. You're not going to get rich, but this is a forum largely focused on sorting and hoarding pennies because their metal content is theoretically higher than their face value....and picking up beer cans on the side of the road because they are worth half a cent at the scrap yard. If a few hundred dollars interest on an essentially risk free $10k investment is chump change and therefore not worth the trouble, then what the heck is up with all the penny sorting and wire stripping that apparently goes on here?

[hobo finds]

Redemption Information
Minimum term of ownership: 1 year
Interest-earning period: 30 years or until you cash them, whichever comes first
Early redemption penalties:
Before 5 years, forfeit interest from the previous 3 months
After 5 years, no penalty


Thanks for the info. It says if you cash out after a year you lose the interest for the previous 3 months....

[knibloe]

I considered it until I read the limit of $10,000.
What difference does it make if I invest $100,000 or 10 people invest the limit of $10,000? The government never makes sense in programs they provide.

I wondered about the limit as well. We sell billions in bonds to the Chinese, but won't let me buy more than 10K? It might be that there are tax advantages to the bonds. However, that doesnt't fly either as the Chinese don't pay taxes on their earnings from US bonds.

[Sanford02]

I considered it until I read the limit of $10,000.
What difference does it make if I invest $100,000 or 10 people invest the limit of $10,000? The government never makes sense in programs they provide.

I wondered about the limit as well. We sell billions in bonds to the Chinese, but won't let me buy more than 10K? It might be that there are tax advantages to the bonds. However, that doesnt't fly either as the Chinese don't pay taxes on their earnings from US bonds.

The $10k limit is certainly frustrating for those who have more that they would like to invest. However, if your bank called you today and said, "Hey we noticed you have $35k sitting in a savings account earning almost nothing. If you put $10k into a 12 month CD, we'll pay you 4.81%....but only $10k." -- would you decline the offer because they limited it to $10,000?

[Dr. Cadmium]

Just a reminder to everyone that the cutoff date is October 28th to guarantee delivery of the 9.62% rate. Next month the rate will be lower.

Also, the $10,000 limit is per SSN. If you have a spouse or children you can purchase $10K worth of bonds for each one of them using the same account.

[Dr. Cadmium]

Also, here is the only place where you can buy them. You need to create an account: https://www.treasurydirect.gov/savings-bonds/i-bonds/#

[Sanford02]

The next 6 month period will be 6.48%. So if you buy before 10/28, you will lock in a composite rate of 8.05%. There is no other "risk-free" option that pays anywhere close to that.

[68Camaro]

The next 6 month period will be 6.48%. So if you buy before 10/28, you will lock in a composite rate of 8.05%. There is no other "risk-free" option that pays anywhere close to that.

I thought they didn't set the rate for the next period until 1 Nov? Have the parameters already been set?

[Sanford02]

The next 6 month period will be 6.48%. So if you buy before 10/28, you will lock in a composite rate of 8.05%. There is no other "risk-free" option that pays anywhere close to that.

I thought they didn't set the rate for the next period until 1 Nov? Have the parameters already been set?

It is determined by a known calculation, and as of Oct 13, all the variables in that calculation are known. This is assuming that the fixed rate portion remains 0%. It is essentially the change in the semi-annual inflation rate times 2.

(((Sept CPI-U) - (March CPI-U)) / (March CPI-U)) x 2

Plug in all the numbers and you get 6.48%

[68Camaro]

Thanks!

[Cu Penny Hoarder]

Buy PMs instead.

When SHTF your bonds won't worth anything.