which i bond to redeem?

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which i bond to redeem?

Postby gracemaclean » Sun Feb 10, 2013 3:30 am

I have two $5000 i bonds over a year old: one from August, 2011; and one from January, 2012.
I need to redeem one of them. Which one should I redeem, or does it make no difference?
Thank you.
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Re: which i bond to redeem?

Postby kupo » Sun Feb 10, 2013 3:44 am

Makes no difference really since the fixed rate portion is 0% on both.
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Re: which i bond to redeem?

Postby #Cruncher » Sun Feb 10, 2013 7:42 am

It makes little difference. If the fixed rate were higher for one of them, you'd want to redeem the other. But, as kupo notes, the fixed rate is the same.

Since both are less than 5 years old, you'll lose the last three month's interest whichever one you redeem. This means that if you redeemed this month, you'd get the value as of November 2012 for either:
$5,222 $5,000 I Bond with 0% Fixed Rate Purchased August 2011
$5,114 $5,000 I Bond with 0% Fixed Rate Purchased January 2012

Keeping the August bond might be slightly better because its value rises 1.30% from $5,222 in November 2012 to $5,290 in July 2013. The January bond's value rises only 1.25% from $5,114 to $5,178 over the same period. Keeping the August bond you'd also be 5 months closer to holding for 5 years, when the 3-month penalty goes away.
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Re: which i bond to redeem?

Postby camaro327 » Sun Feb 10, 2013 8:36 am

They are so close in time the difference is immaterial. Small tax difference, small distance closer to 5 years, etc.
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