I-Savings Bonds

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ny_rn
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I-Savings Bonds

Post by ny_rn » Sun Jul 12, 2015 6:56 pm

How often do you purchase I-Savings Bonds? Also, what is your primary use for them? I.e. - extended emergency fund, bond allocation, etc.

I contribute $25 every Monday (automated) to this account and consider this an extended emergency fund. Are there any negatives to so many frequent contributions throughout the year, although it's automated and I do not think about it.

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Re: I-Savings Bonds

Post by TomatoTomahto » Sun Jul 12, 2015 7:06 pm

I don't have such a service, so I just buy them once a year at TreasuryDirect. I guess it's sort of an emergency fund, but I buy em and forget em.

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Re: I-Savings Bonds

Post by bcjb » Sun Jul 12, 2015 7:06 pm

We purchased some I-bonds when the fixed rate was 0.1% and 0.2%, and they are part of our emergency fund. I'm reluctant to buy more now that the overall rate is 0%; I'm waiting until November.

I don't think there's any downside to buying them in $25 chunks. In fact, it makes redemption incredibly straightforward, since the minimum redemption amount is $25.

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Re: I-Savings Bonds

Post by Mel Lindauer » Sun Jul 12, 2015 8:07 pm

ny_rn wrote:How often do you purchase I-Savings Bonds? Also, what is your primary use for them? I.e. - extended emergency fund, bond allocation, etc.

I contribute $25 every Monday (automated) to this account and consider this an extended emergency fund. Are there any negatives to so many frequent contributions throughout the year, although it's automated and I do not think about it.
Hopefully you're aware that you can't redeem them until you've held them for one year, so make sure that in the interim you have a Plan B for any emergency that might occur.
Best Regards - Mel | | Semper Fi

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Re: I-Savings Bonds

Post by ny_rn » Sun Jul 12, 2015 8:29 pm

Thanks for the responses. I do have a primary emergency fund in place for immediate emergencies, since I cannot redeem the I-Savings Bonds for one year.

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Re: I-Savings Bonds

Post by camaro327 » Mon Jul 13, 2015 6:57 am

They accrue interest monthly so you would have 12 different maturities vs 1 if you just bought them all at once.

More of a bookkeeping downside if any.

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Re: I-Savings Bonds

Post by asif408 » Mon Jul 13, 2015 7:42 am

ny_rn wrote:How often do you purchase I-Savings Bonds? Also, what is your primary use for them? I.e. - extended emergency fund, bond allocation, etc.

I contribute $25 every Monday (automated) to this account and consider this an extended emergency fund. Are there any negatives to so many frequent contributions throughout the year, although it's automated and I do not think about it.
I purchase them manually once every 6 months (except the current 6 month period because the rate is 0%; I'll wait until November). There are part of my second tier emergency fund but I also include them in my asset allocation (under my fixed income portion that is interest rate risk free) because I may not need to redeem them for a while.

Nothing wrong with your method but it might be better to buy in larger chunks and just do it once at the end of the month. That way you have fewer I-bonds to keep track of and you'll only have to hold them slightly over 11 months, since even holding them one day in a month counts as a 1 month holding period. I believe you can make partial redemptions as well so there is no need to have so many small purchases when you can just partially redeem a larger one (I made this mistake initially but am keeping the ones I bought because of their higher fixed rates).

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Re: I-Savings Bonds

Post by Clever_Username » Mon Jul 13, 2015 10:03 am

I purchased the maximum $10,000 spread out over 2014. I have already purchased $7000 early this year. I will buy another $3000 in November.

When they hit the one-year mark, they become part of my emergency finance plan. I guess you could call that an emergency fund. I spend about $3500/month (not including savings), so having I-Bonds over a year old obviates the need to hold a significant amount of cash.
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Re: I-Savings Bonds

Post by VictoriaF » Mon Jul 13, 2015 10:24 am

I buy $10k worth of I Bonds once a year. I used to buy them in early January to be over and done with, but this efficiency has backfired. In May 2014, the Treasury has raised the fixed rate to 0.1%. It was unexpected, unfounded, and unfortunate--because I had already purchased my 2014 maximum. This year, I am waiting for the November rate to be announced. If it's still 0% fixed, the waiting will have done no harm. If it's higher than 0%, my waiting will be justified.

My preference for a single $10k purchase is due to:
- ability to wait for a higher than 0% rate
- easier asset maintenance
- confidence that I will not forget to buy I Bonds whenever I decide to buy them.

I am using I Bonds as tax-deferred assets in non-retirement accounts. I treat them as $10k real income 30 years from now.

Victoria
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Re: I-Savings Bonds

Post by dratkinson » Mon Jul 13, 2015 11:34 am

The #1 reason I bought savings bonds, as their interest is tax-deferred, was to extends my annual tax-advantaged space.

Buying. It's easy to buy savings bonds at TD. The transaction happens within 1-2 days.
Tracking. It's easy as TD computes everything (not redeemable, redeemable with penalty, fully redeemable) for you.
Selling. It's easy to sell savings bonds at TD. The transaction happens within 1-2 days.

So buying (within annual purchase limits)/tracking/selling small/large denomination savings bonds is not a problem.

I considered them a tier of my emergency funds and bought until I had 2-years of living expenses. Fixed interest rate was too low to devote more space to savings bonds.

If interested in savings bonds, you might like to play the "$5K paper savings bonds refund on your federal tax return" game. The game makes doing taxes less onerous. The game is described in the Wiki. (I'm a three time winner. :) )



Full disclosure. I've recently sold all my savings bond (paper and electronic) to simplify life for myself and heirs: two fewer things to worry about/track. I moved their proceeds to muni bonds as I've come to prefer their larger federal tax benefit, to the smaller state tax benefit of savings bonds. Yes I know muni are more risky, but their yield is also higher. I've also increased my mmkt EF tier to compensate for selling the savings bond EF tier. Bottom line: no change to my fixed income allocation and fewer pieces to manage. It's my new road to Dublin.

If the fixed interest rate ever again rises above 1%, might have to rethink this.





Edit.
Last edited by dratkinson on Tue Jul 14, 2015 10:12 am, edited 1 time in total.
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Re: I-Savings Bonds

Post by John3754 » Mon Jul 13, 2015 11:41 am

Like Victoria, I do a single max allotment purchase once a year, I count it as part of my fixed income allocation with the idea that it will provide me with $10k real (minus taxes) income every year 30 years from now.

Regarding what happened with the unexpected jump in the fixed rate, yes, the same thing happened to me and it did irk me, but lets not beat ourselves up over it too badly. The fact is that on a $10k purchase we're talking about a difference of $10 in interest. Yes, I know, its tax deferred and compounded over 30 years, and every little bit helps, I get that, but honestly I have better things to worry about than $10 a year in interest.
Last edited by John3754 on Mon Jul 13, 2015 11:45 am, edited 1 time in total.

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Re: I-Savings Bonds

Post by #Cruncher » Mon Jul 13, 2015 11:43 am

ny_rn in original post wrote:I contribute $25 every Monday (automated) to this account ... Are there any negatives to so many frequent contributions throughout the year [ ? ]
I assume, ny_rn, you're referring to the TreasuryDirect Payroll Savings Plan (PSP). If you have this set up to purchase a $25 bond every week, this leads, in my opinion, to bookkeeping clutter. I would consider, instead, setting up the PSP to purchase bonds in $650 increments. This way the weekly $25 contribution would accumulate in a TD "Certificate of Indebtedness" until the balance reaches $650. This would take 26 weeks, so you'd end up buying only 2 bonds per year instead of 52. This would be much easier to keep track of.
TreasuryDirect wrote:The incoming credits from your payroll office will result in the purchase of a Payroll Zero-Percent Certificate of Indebtedness (Payroll C of I) within your TreasuryDirect account. Each time your Payroll C of I balance reaches your designated purchase amount, a savings bond will be issued.
If twice a year is too infrequent, make the trip point smaller. E.g., $325 would get you a new bond every 13 weeks.
VictoriaF in [url=https://www.bogleheads.org/forum/viewtopic.php?p=2552610#p2552610]this post[/url] wrote:I used to buy them in early January to be over and done with, but this efficiency has backfired. In May 2014, the Treasury has raised the fixed rate to 0.1%. It was unexpected, unfounded, and unfortunate--because I had already purchased my 2014 maximum.
Your memory is off by six months, Victoria. The unexpected jump was to 0.2% in November 2013. In May 2014 the fixed rate came down a touch to 0.1%. (See TD's What have rates been in the past?.) I remember your grief at the time: Re: Nov 2013 I Bond Rate - 1.38% (0.20% Fixed).
VictoriaF in same post wrote:I treat them as $10k real income 30 years from now.
I hope this doesn't come about. If so, it would mean that interest rates have stayed at their current low levels for 30 years. In a more optimistic scenario, interest rates will rise enough in a few years that you will want to redeem your 0% fixed rate I Bonds and invest the proceeds in TIPS.
Last edited by #Cruncher on Mon Jul 13, 2015 12:43 pm, edited 1 time in total.

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Re: I-Savings Bonds

Post by VictoriaF » Mon Jul 13, 2015 12:38 pm

John3754 wrote:Like Victoria, I do a single max allotment purchase once a year, I count it as part of my fixed income allocation with the idea that it will provide me with $10k real (minus taxes) income every year 30 years from now.

Regarding what happened with the unexpected jump in the fixed rate, yes, the same thing happened to me and it did irk me, but lets not beat ourselves up over it too badly. The fact is that on a $10k purchase we're talking about a difference of $10 in interest. Yes, I know, its tax deferred and compounded over 30 years, and every little bit helps, I get that, but honestly I have better things to worry about than $10 a year in interest.
I did not beat myself too badly, but I realized that there was no objective reason to buy $10k of I Bonds at 0% in January, when I could wait until May or November.

The decisions get more interesting when we have 0.1% fixed rate in January:
- Should we use it while we can, because it may go down in May and remain 0%?
- Should we wait for a possibly higher fixed rate later in the year?
- Or should we split the contribution into three pieces: January, May and November?

Facing the uncertainty, I would make a guess and not beat myself at all, regardless of the outcome.

Victoria
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Re: I-Savings Bonds

Post by dbCooperAir » Mon Jul 13, 2015 1:30 pm

The primary role of our I-bonds was a 2nd tier emergency fund at first. As the retirement pile has grown I just now include them in our general retirement AA, if I need to sell them its not going to move the AA meter enough to worry about. I'm just about to the point of not thinking about a separate emergency fund all together.

I tend to buy in $2,500 increments, its close to our monthly outflow.
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Re: I-Savings Bonds

Post by z3r0c00l » Mon Jul 13, 2015 4:01 pm

Also a 2nd tier to the emergency fund. Buying $10,000 a year until I hit 12 months of expenses (later this year). Will hold off on getting any more at that point probably.

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Re: I-Savings Bonds

Post by ny_rn » Tue Jul 14, 2015 6:25 am

#Cruncher wrote:
ny_rn in original post wrote:I contribute $25 every Monday (automated) to this account ... Are there any negatives to so many frequent contributions throughout the year [ ? ]
I assume, ny_rn, you're referring to the TreasuryDirect Payroll Savings Plan (PSP). If you have this set up to purchase a $25 bond every week, this leads, in my opinion, to bookkeeping clutter. I would consider, instead, setting up the PSP to purchase bonds in $650 increments. This way the weekly $25 contribution would accumulate in a TD "Certificate of Indebtedness" until the balance reaches $650. This would take 26 weeks, so you'd end up buying only 2 bonds per year instead of 52. This would be much easier to keep track of.
TreasuryDirect wrote:The incoming credits from your payroll office will result in the purchase of a Payroll Zero-Percent Certificate of Indebtedness (Payroll C of I) within your TreasuryDirect account. Each time your Payroll C of I balance reaches your designated purchase amount, a savings bond will be issued.
If twice a year is too infrequent, make the trip point smaller. E.g., $325 would get you a new bond every 13 weeks.

Thanks! I will check into this.

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Re: I-Savings Bonds

Post by kjvmartin » Tue Jul 14, 2015 6:35 am

I lack understanding on this - why would anyone be buying any savings bonds when the rate is so low? 0% interest doesn't even beat my crummy checking account.

Mike

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Re: I-Savings Bonds

Post by TomatoTomahto » Tue Jul 14, 2015 6:44 am

That's 0 percent real, not nominal.

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Re: I-Savings Bonds

Post by VictoriaF » Tue Jul 14, 2015 10:46 am

TomatoTomahto wrote:That's 0 percent real, not nominal.
It's implied in your statement but I'd like to emphasize that the most important value of I Bonds is not their current yield but their design to trace inflation. If inflation spikes in the future, the I Bond interest will spike too. In July 2015 it's hard to believe that inflation can spike, but in the 1980s it was a fact of life.

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Re: I-Savings Bonds

Post by englishgirl » Tue Jul 14, 2015 11:06 am

I started buying a VERY small amount every month the last time the fixed rate went above 0%, and have just kept on even though the fixed rate went back down. I'm currently at $40 a month, I think. I've been bumping the monthly amount by $5 every six months. I set up an auto-purchase for 6 months, and then re-set another one at some point before it runs out.

Eh. It's not very exciting. It's not so much money that it's going to make a difference to anything, I expect. But it's also not so much money that I actually *miss* it, so it's another way to sneak savings on myself. This is just a second tier emergency fund for me.
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Re: I-Savings Bonds

Post by John3754 » Tue Jul 14, 2015 11:50 am

kjvmike wrote:I lack understanding on this - why would anyone be buying any savings bonds when the rate is so low? 0% interest doesn't even beat my crummy checking account.

Mike
I Bonds are insurance against future inflation. Your crummy checking account may be beating them right now, but if inflation rears its head in years to come then my I Bonds might crush your checking account. Also, since there's a limit on how much you can put in I Bonds per year, I buy them this year or lose the potential space forever.

When inflation is zero or negative nobody likes inflation indexed securities, but historically inflation has been considerably higher than it is now, and it is a serious threat to long term savers, therefore I bonds are still valuable IMO.

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Re: I-Savings Bonds

Post by #Cruncher » Tue Jul 14, 2015 1:55 pm

kjvmike wrote:... why would anyone be buying any savings bonds when the rate is so low? 0% interest doesn't even beat my crummy checking account.
TomatoTomahto, referring to kjvmike's post, wrote:That's 0 percent real, not nominal.
You say "real", TomatoTomahto, I say "nominal". For I Bonds purchased May - October 2015 the composite rate will be 0% for their first six months, and that is the nominal rate. Adjusting the composite rate for the current -0.80% semi-annual inflation rate, the real annual earnings rate for the first six months is actually +1.62%. [1]

If you're planning to buy I Bonds this year, kjvmike, I suggest you not buy any more until November. Go ahead and leave the cash in your "crummy checking account". Any interest you get would be a plus compared to the $0 you'd earn the first six months on an I Bond bought before November.

The fixed rate may well remain at 0% in November, but most likely, the composite rate will be significantly more than 0%. [2] And you'll start getting that higher rate right away. If you were to buy an I Bond this month, you'd have to wait until January to start earning more than 0%.
  1. Code: Select all

    1.62% = 1 / (1 - 0.80%) ^ 2 - 1
    This is a consequence of the 0% floor on the composite rate.(See Combining the two rates on the TD web site.)
    The combined rate will never be less than zero.
    This means that over its lifetime, if there are any September-March or March-September periods of negative CPI change, the real return of an I Bond with a 0% fixed rate will actually be greater than 0%. For example, consider a $1,000 I Bond with 0.00% Fixed Rate Purchased May 2008. Its value will grow to $1,175.20 on November 1st 2015. The 7-1/2 years from 5/2008 to 11/2015 include two six-month periods subject to the 0% floor on the composite rate. This causes its real return over the 7-1/2 years to be almost 0.5% as shown below. (CPI figures from CPI-U since 1961.)

    Code: Select all

     1.1325 = 236.119 / 208.490 [ CPI March 2015 vs Sept 2007]
    1037.70 = 1175.20 / 1.1325  [ Real value at 11/2015 ] 
      0.49% = 2 * ((1037.70 / 1000) ^ (1 / 15) - 1) [ real annual growth rate over 7.5 years ]
  2. The composite rate effective on new purchases beginning November will reflect the six-month change in the CPI from March - September 2015. Even if the September CPI has no growth year-over-year, the six-month increase would be about +0.81%. Combining this with a 0% fixed rate would produce a composite rate of 1.62%.

    Code: Select all

    0.81% = 238.031 / 236.119 - 1

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Re: I-Savings Bonds

Post by TomatoTomahto » Tue Jul 14, 2015 2:42 pm

That's what I get for responding to a post at 6:44 AM!

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Re: I-Savings Bonds

Post by larmewar » Wed Jul 15, 2015 9:47 pm

My I-bond holdings met several purposes: 1) Part of emergency fund, 2) Stash proceeds from a 2005 rental house sale that is not part of investment portfolio, 3) FI alternative TIPs and bond funds and 4) inflation protection. Recently (since 2011), I mostly bought 3-4 times a year (plus tax refund couple of years) when the Ibond rates (expected inflation) seemed better than CDs, TIPS and bond MFs).

I'm approaching 59 1/2 and will be able to use IRA withdrawals in case of extended emergency such as job loss. So I've started cashing 0-0.2% FR I bonds to pay down mortgage. The 0% composite rate was a significant factor in the decision.

Lar

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Re: I-Savings Bonds

Post by supernova » Wed Jul 15, 2015 10:28 pm

kjvmike wrote:I lack understanding on this - why would anyone be buying any savings bonds when the rate is so low? 0% interest doesn't even beat my crummy checking account.

Mike
If for an emergency fund. Since you need to wait a year before you can cash them, you want to buy them ASAP despite their crummy rate.

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Re: I-Savings Bonds

Post by Clever_Username » Thu Jul 16, 2015 12:46 am

#Cruncher wrote:
VictoriaF in same post wrote:I treat them as $10k real income 30 years from now.
I hope this doesn't come about. If so, it would mean that interest rates have stayed at their current low levels for 30 years. In a more optimistic scenario, interest rates will rise enough in a few years that you will want to redeem your 0% fixed rate I Bonds and invest the proceeds in TIPS.
I realize I'm not who you're responding to, but in case it's general advice, I have a quick question.

Obviously I wouldn't want to do this today, but why would I want to in a few years? Maybe I'm not understanding something, but given the different tax treatments, don't TIPS (especially in a higher interest rate environment) go into tax-advantaged accounts? Or maybe it's different uses of the bonds?

Context: I'm in my early 30s, so putting a TIPS fund in an IRA wouldn't allow me to use it as an inflation-adjusted cash/emergency fund for a long time (without some big penalties). Meanwhile, my 0% I-Bonds could be redeemed a year or so from now, with small penalty, if they're needed.
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Re: I-Savings Bonds

Post by #Cruncher » Thu Jul 16, 2015 7:27 am

Clever_Username in previous post wrote:
#Cruncher [ responding to VictoriaF in [url=http://www.bogleheads.org/forum/viewtopic.php?p=2552689#p2552689]this post[/url] ] wrote:... In a more optimistic scenario, interest rates will rise enough in a few years that you will want to redeem your 0% fixed rate I Bonds and invest the proceeds in TIPS.
... why would I want to in a few years? ... don't TIPS (especially in a higher interest rate environment) go into tax-advantaged accounts?
Yes, it's better to place TIPS in a retirement account if possible. But even in a taxable account, a TIPS with only a moderately positive yield will outperform a tax deferred I Bond with a 0% fixed rate over 30 years. If an I Bond is redeemed after 5 years and the after tax proceeds invested in a TIPS then, given these assumptions:

Code: Select all

Amount              1,000 
Federal tax           25%
Annual CPI increase    4% [ 1 ]
Years to redeem         5
Remaining years        25
The TIPS would only have to yield more than 0.52% over the remaining 25 years to do better than the I Bond held for the entire 30 years.

Code: Select all

                          I Bond      TIPS
                          -------    -------
Base rate                 0.0000%    0.5146%
Annual after tax growth   4.0000%    3.4014% [ 2 ]
I Bond value in 5 years               1,217  [ 3 ]
Tax in 5 years                          (54)
Value after 30 years       3,243      2,683  [ 4 ]
Tax after 30 years          (561)        -
After tax nominal value    2,683      2,683
After tax real value         827        827  [ 5 ]
I'm not saying one should immediately redeems I Bonds and buy 30-year TIPS just because their yields exceed 0.52%. The better option, in my opinion would be to hold the I Bonds a while. When they're no longer needed for emergencies and if TIPS rates rise substantially, then consider exchanging them for TIPS.
  1. I'm assuming a high 4% annual CPI increase to illustrate my point. With a 2% annual CPI increase, the "breakeven" TIPS yield would be only about 0.15%.
  2. Code: Select all

    3.4014% = 75% * (1.04 * 1.005146 - 1)
  3. Code: Select all

    1,217 =  1000       * 1.04     ^ 5
  4. Code: Select all

    3,243 =  1000       * 1.04     ^ 30
    2,683 = (1217 - 54) * 1.034014 ^ 25
  5. Code: Select all

      827 =  2683       / 1.04     ^ 30

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Re: I-Savings Bonds

Post by Grt2bOutdoors » Thu Jul 16, 2015 8:04 am

VictoriaF wrote:
TomatoTomahto wrote:That's 0 percent real, not nominal.
It's implied in your statement but I'd like to emphasize that the most important value of I Bonds is not their current yield but their design to trace inflation. If inflation spikes in the future, the I Bond interest will spike too. In July 2015 it's hard to believe that inflation can spike, but in the 1980s it was a fact of life.

Victoria
One could just buy a 6 month Treasury and roll it forward every 6 months, nominal bonds will adjust over time to higher interest rates.
Or set up a ladder - 90 day, 6 months, 1 year Treasuries - roll them forward as they mature, as interest rates rise, they too will reflect the higher rates.
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Re: I-Savings Bonds

Post by Clever_Username » Thu Jul 16, 2015 8:44 am

#Cruncher wrote:I'm not saying one should immediately redeems I Bonds and buy 30-year TIPS just because their yields exceed 0.52%. The better option, in my opinion would be to hold the I Bonds a while. When they're no longer needed for emergencies and if TIPS rates rise substantially, then consider exchanging them for TIPS.
This makes sense. Thank for the detailed answer.
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Re: I-Savings Bonds

Post by VictoriaF » Thu Jul 16, 2015 3:51 pm

Grt2bOutdoors wrote:
VictoriaF wrote:
TomatoTomahto wrote:That's 0 percent real, not nominal.
It's implied in your statement but I'd like to emphasize that the most important value of I Bonds is not their current yield but their design to trace inflation. If inflation spikes in the future, the I Bond interest will spike too. In July 2015 it's hard to believe that inflation can spike, but in the 1980s it was a fact of life.

Victoria
One could just buy a 6 month Treasury and roll it forward every 6 months, nominal bonds will adjust over time to higher interest rates.
Or set up a ladder - 90 day, 6 months, 1 year Treasuries - roll them forward as they mature, as interest rates rise, they too will reflect the higher rates.
This would work, but I Bonds work better. I Bonds are simpler: for 30 years you buy them once year, for the next 30 years you sell them once a year. With the Treasuries, you have to monitor the yields of various maturities and buy and sell them several times a year.

Furthermore, if you create a Treasury bond ladder in a taxable account, you have to pay taxes annually on the interest received. And the tax-deferred space is limited.

Victoria
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Re: I-Savings Bonds

Post by dh » Wed Oct 28, 2015 3:57 pm

I want to renew (bump up) this old thread given that many held off purchasing I-bonds in 2015 until November. November 1 is just a few days away. Obviously we don't know the fixed rate, yet with the CPI-U change from March 2015 to September 2015 a 0% fixed rate I-bond will have a composite rate will be 1.54% for the first six months. If the next inflation numbers (Sep 2015; Mar 2016) drop the composite back to 0% for the following 6 months, we are looking at an annual rate of 0.77% for the I-Bond. Given the I-Bond is state tax free (among other "benefits"), that compares favorably to my savings account. So, "I am in" for a November purchase. I would value hearing if others are still "in" on a November purchase.

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JoMoney
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Re: I-Savings Bonds

Post by JoMoney » Wed Oct 28, 2015 4:20 pm

^ I came to the same conclusion awhile back. The composite rate was better than other safe options at the time, and I really like the tax deferral on the interest. I also like the fact that they're not 'marketable' securities, so I don't have to worry about current prices, liquidity, or anything going on in the bond market or have to align the bond maturities with my need of the money.
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Re: I-Savings Bonds

Post by Atgard » Wed Oct 28, 2015 4:27 pm

I also waited this year (no point buying 0% fixed and 0% variable). Even at 0% fixed, like you said, you have a decent return for 6 months and then who knows after that, but the floor still beats most savings accounts. I'm also holding out hope for 0.1% or 0.2% fixed just because it sounds better than zero. But I will probably buy $10,000 worth Nov 1 no matter what.

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Re: I-Savings Bonds

Post by digit8 » Wed Oct 28, 2015 4:59 pm

I have up to now bought in small chunks every month, but got tired of it for reasons of bookeeping and aesthetics (Treasury Direct is clunky enough without trying to work through 25+ distinct entries). With the current zero rate I emptied out with a 3 month penalty of nothing, and starting January I go to a once-per-year deposit.
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Re: I-Savings Bonds

Post by VictoriaF » Wed Oct 28, 2015 5:04 pm

Atgard wrote:I also waited this year (no point buying 0% fixed and 0% variable). Even at 0% fixed, like you said, you have a decent return for 6 months and then who knows after that, but the floor still beats most savings accounts. I'm also holding out hope for 0.1% or 0.2% fixed just because it sounds better than zero. But I will probably buy $10,000 worth Nov 1 no matter what.
Buying in November the 2015 I Bonds is a no-brainer.

However, if the fixed rate is raised above 0%, we'll have to decide whether to buy the 2016 I Bonds at the non-zero rate in January or to wait for an even better rate later next year.

For the record: I prefer the interesting option.

Victoria
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Re: I-Savings Bonds

Post by furwut » Wed Oct 28, 2015 5:09 pm

I'm liquidating mine. Using the money to fund the Northwest FCU CD offer (3%). Also taking advantage of a special savings account at 5%.

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Re: I-Savings Bonds

Post by Clever_Username » Sun Nov 01, 2015 11:21 am

Huh, logged in to check this morning and my first I-Bond purchase, from May of 2014, is listed as having interest rate "Not Available" -- the other four purchases all have 0% listed. That's new.
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Re: I-Savings Bonds

Post by convert949 » Sun Nov 01, 2015 12:18 pm

I purchase them yearly at max as a part of my bond allocation and as a hedge against inflation. They will probably be the last thing I spend...

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Re: I-Savings Bonds

Post by Mel Lindauer » Sun Nov 01, 2015 12:26 pm

Clever_Username wrote:Huh, logged in to check this morning and my first I-Bond purchase, from May of 2014, is listed as having interest rate "Not Available" -- the other four purchases all have 0% listed. That's new.
May and Nov. purchases will have their new interest rates available Mon. or Tues. Remember, the composite rate changes on the six- and twelve-month anniversaries of issue, and Nov. is the six-month anniversary of an I Bond with an issue month of May.
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Re: I-Savings Bonds

Post by b4nash » Sun Nov 01, 2015 1:26 pm

Atgard wrote:... I will probably buy $10,000 worth Nov 1 no matter what.
May want to wait until later in the month. From the wiki:

Since I Bonds earn the full month's interest if you own them on the last day of that month, it is generally a good idea to buy I Bonds at the end of a month after also earning interest on that same money in a bank account during most of that same month.

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Re: I-Savings Bonds

Post by Mel Lindauer » Sun Nov 01, 2015 1:28 pm

b4nash wrote:
Atgard wrote:... I will probably buy $10,000 worth Nov 1 no matter what.
May want to wait until later in the month. From the wiki:

Since I Bonds earn the full month's interest if you own them on the last day of that month, it is generally a good idea to buy I Bonds at the end of a month after also earning interest on that same money in a bank account during most of that same month.
Yes, buy your I Bonds late in the month and redeem them at the beginning of the month, since holding them later in the month won't earn any additional interest.
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Re: I-Savings Bonds

Post by Epsilon Delta » Sun Nov 01, 2015 1:50 pm

b4nash wrote:
Atgard wrote:... I will probably buy $10,000 worth Nov 1 no matter what.
May want to wait until later in the month. From the wiki:

Since I Bonds earn the full month's interest if you own them on the last day of that month, it is generally a good idea to buy I Bonds at the end of a month after also earning interest on that same money in a bank account during most of that same month.
Of course this assumes you have someplace else to put the money for 25 days or so where it will earn enough interest to matter. If the $10,000 is sitting in a savings account it's entirely reasonable to just make the purchase and not worry about the $0.80 in extra interest you could earn by perfecting the timing,.

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Re: I-Savings Bonds

Post by Clever_Username » Mon Nov 02, 2015 9:10 am

Mel Lindauer wrote:
Clever_Username wrote:Huh, logged in to check this morning and my first I-Bond purchase, from May of 2014, is listed as having interest rate "Not Available" -- the other four purchases all have 0% listed. That's new.
May and Nov. purchases will have their new interest rates available Mon. or Tues. Remember, the composite rate changes on the six- and twelve-month anniversaries of issue, and Nov. is the six-month anniversary of an I Bond with an issue month of May.
Ah, that makes sense. Thanks!
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Re: I-Savings Bonds

Post by JDDS » Mon Nov 02, 2015 10:01 am

Just posted, woot: 0.10% fixed rate.

EE's declined to 0.10%.

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Re: I-Savings Bonds

Post by vectorizer » Mon Nov 02, 2015 10:47 am

ny_rn wrote:How often do you purchase I-Savings Bonds? Also, what is your primary use for them? I.e. - extended emergency fund, bond allocation, etc.
Once a month at end of month, automatic $1500 via TD. Six months to my account, then six months to my wife's account. We put an extra $1000 each in on the month I get profit sharing payment, to buy the max $10k/yr each.

I Bonds are a part of our bond allocation in retirement savings, but really it began after we paid off the house. I simply figured that the former mortgage payment should be redirected into as safe an investment as possible, since before we were paying down the mortgage loan which was a perfectly safe "investment".

I'm especially happy we made that decision because now that I'm analyzing our income sources for possible early retirement (~58YO), every bit of no tax or low tax accounts is very precious in lowering our taxable income for a given net income need.

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Re: I-Savings Bonds

Post by BanditKing » Mon Nov 02, 2015 11:09 am

$50/week, totaling $2600 year. TD just takes it from my checking account like clockwork. Set it and forget it.

I only have about $13,000 worth total. It's a small, but measurable part of our overall portfolio.

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Re: I-Savings Bonds

Post by Dutch » Mon Nov 02, 2015 12:19 pm

JDDS wrote:Just posted, woot: 0.10% fixed rate.

EE's declined to 0.10%.
The fixed rate on EE Bonds is pretty much meaningless at these low rates. As long as the 20 year doubling feature remains in place, I'll be back in January to purchase my max allocation for the year.

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Re: I-Savings Bonds

Post by VictoriaF » Mon Nov 02, 2015 1:05 pm

VictoriaF wrote:
Atgard wrote:I also waited this year (no point buying 0% fixed and 0% variable). Even at 0% fixed, like you said, you have a decent return for 6 months and then who knows after that, but the floor still beats most savings accounts. I'm also holding out hope for 0.1% or 0.2% fixed just because it sounds better than zero. But I will probably buy $10,000 worth Nov 1 no matter what.
Buying in November the 2015 I Bonds is a no-brainer.

However, if the fixed rate is raised above 0%, we'll have to decide whether to buy the 2016 I Bonds at the non-zero rate in January or to wait for an even better rate later next year.

For the record: I prefer the interesting option.

Victoria
Let us live in interesting times: Now we have to decide whether to buy I Bonds at 0.1% in January 2016. In addition to buying them now, of course.

Victoria
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Re: I-Savings Bonds

Post by Grt2bOutdoors » Mon Nov 02, 2015 1:11 pm

Dutch wrote:
JDDS wrote:Just posted, woot: 0.10% fixed rate.

EE's declined to 0.10%.
The fixed rate on EE Bonds is pretty much meaningless at these low rates. As long as the 20 year doubling feature remains in place, I'll be back in January to purchase my max allocation for the year.
The EE's attractiveness relies on it's 20 year zero feature - no one should be purchasing these for their huge 0.10% or 0.30% (prior issue) coupon rate. That 20 year doubling feature remains in place and given the current 20 year STRIPs yield to maturity, it remains highly attractive for a nominal security.
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Re: I-Savings Bonds

Post by Grt2bOutdoors » Mon Nov 02, 2015 1:12 pm

VictoriaF wrote:
VictoriaF wrote:
Atgard wrote:I also waited this year (no point buying 0% fixed and 0% variable). Even at 0% fixed, like you said, you have a decent return for 6 months and then who knows after that, but the floor still beats most savings accounts. I'm also holding out hope for 0.1% or 0.2% fixed just because it sounds better than zero. But I will probably buy $10,000 worth Nov 1 no matter what.
Buying in November the 2015 I Bonds is a no-brainer.

However, if the fixed rate is raised above 0%, we'll have to decide whether to buy the 2016 I Bonds at the non-zero rate in January or to wait for an even better rate later next year.

For the record: I prefer the interesting option.

Victoria
Let us live in interesting times: Now we have to decide whether to buy I Bonds at 0.1% in January 2016. In addition to buying them now, of course.

Victoria
Buy now, and hedge your bets - purchase 1/3 in January, wait and see for May and November next year.
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