Sell I-Bond just to re Buy at fixed interest?

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SimonJester
Posts: 1956
Joined: Tue Aug 16, 2011 12:39 pm

Sell I-Bond just to re Buy at fixed interest?

Post by SimonJester » Wed May 15, 2019 12:55 pm

Assuming you have an I-Bond with a 0% fixed interest, already earning the 1.40% annualized rate, does it make any sense to sell just to re buy at the current fixed rate? This assumes you dont need the cash for 12to 60 months and you have already held the bond for 5 years.

Also assumes you have the ability to deduct I-Bond interest for educational use this year...
"They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety." - Benjamin Franklin

LK2012
Posts: 241
Joined: Mon Apr 30, 2012 4:42 pm

Re: Sell I-Bond just to re Buy at fixed interest?

Post by LK2012 » Wed May 15, 2019 1:15 pm

Sure, why not? Assuming you have a fixed amount you are allocating to I-Bond investments (or you would just keep buying more up to the annual limit, and hang on to the older ones), it makes perfect sense to sell an older 0% Fixed Rate I-Bond and replace it with a new 0.5% Fixed Rate one. Of course, this is with the understanding that you would need to keep the new one at least a year, and preferably at least 5 years so as not to lose 3 months interest.

cherijoh
Posts: 6263
Joined: Tue Feb 20, 2007 4:49 pm
Location: Charlotte NC

Re: Sell I-Bond just to re Buy at fixed interest?

Post by cherijoh » Wed May 15, 2019 1:23 pm

SimonJester wrote:
Wed May 15, 2019 12:55 pm
Assuming you have an I-Bond with a 0% fixed interest, already earning the 1.40% annualized rate, does it make any sense to sell just to re buy at the current fixed rate? This assumes you dont need the cash for 12to 60 months and you have already held the bond for 5 years.

Also assumes you have the ability to deduct I-Bond interest for educational use this year...
Not IMO with the $$ limits on purchasing I-bonds.

272 Sheep
Posts: 151
Joined: Thu Mar 26, 2009 4:14 pm
Location: Hooksett, NH

Re: Sell I-Bond just to re Buy at fixed interest?

Post by 272 Sheep » Wed May 15, 2019 1:33 pm

I like getting the 0.5% fixed interest instead of 0%. Using my 0% I-bonds as income suppiement as they get past 5 yr.
Replacing them so to maintain an additional emergency fund.

BanditKing
Posts: 610
Joined: Tue Oct 29, 2013 11:11 pm

Re: Sell I-Bond just to re Buy at fixed interest?

Post by BanditKing » Wed May 15, 2019 1:42 pm

If you have some of your $10000 left, it makes sense to swap em. Just remember, you will owe taxes on the gains of what you sell, and there is a holding period for new purchases.

I swapped about $3500 last year.

aristotelian
Posts: 6043
Joined: Wed Jan 11, 2017 8:05 pm

Re: Sell I-Bond just to re Buy at fixed interest?

Post by aristotelian » Wed May 15, 2019 1:47 pm

I don't see anything wrong with that, assuming you are looking to keep your I Bond allocation level. Of course, you could keep the 0% and buy new 0.5%.

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