AssetClassJunkie wrote: Thu Jan 02, 2025 11:38 am
Now that I Bond quota have been reset for the new year, I'm wondering if it makes more sense to purchase as much as possible immediately now in January, or to wait until immediately before or after the next rate change on May 1?
My thought process was that buying immediately would be beneficial because it gets the clocking ticking on when I can redeem (minimum of 1 year wait), but I also know it's possible that both the fixed and variable rates will change. Are there reasonable anticipations of what directions those rate will go? What are any other important reasons one might wish to purchase immediately vs. wait? Thanks so much!
My usual practice is to wait until mid-April to make the first I Bond decision of the year. The March inflation report, to be issued on April 10, will tell you the new I Bond variable rate, and you can also get a good idea if the fixed rate will increase on May 1. That is a possibility, if real yields continue at these high levels. But if you want to get the clock ticking on the one-year redemption, do it in January, near the end of the month.
And my usual practice is to see what @tipswatcher says and does, thanks for all your work
tipswatcher wrote: Thu Jan 02, 2025 12:13 pm
My usual practice is to wait until mid-April to make the first I Bond decision of the year. The March inflation report, to be issued on April 10, will tell you the new I Bond variable rate, and you can also get a good idea if the fixed rate will increase on May 1. That is a possibility, if real yields continue at these high levels. But if you want to get the clock ticking on the one-year redemption, do it in January, near the end of the month.
This is wonderful, thank you so much for the great advice!
“The best criticism of the bad is the practice of the better.” —Richard Rohr
tipswatcher wrote: Thu Jan 02, 2025 12:13 pm
My usual practice is to wait until mid-April to make the first I Bond decision of the year. The March inflation report, to be issued on April 10, will tell you the new I Bond variable rate, and you can also get a good idea if the fixed rate will increase on May 1. That is a possibility, if real yields continue at these high levels. But if you want to get the clock ticking on the one-year redemption, do it in January, near the end of the month.
This is wonderful, thank you so much for the great advice!
If you aren't already aware, tipswatcher has his own website with excellent content: https://tipswatch.com/ He discusses I Bonds as well as TIPS.
Chip Munk wrote: Thu Jan 02, 2025 1:45 pm
If you aren't already aware, tipswatcher has his own website with excellent content: https://tipswatch.com/ He discusses I Bonds as well as TIPS.
In fact I had no idea—thank you! This is such an excellent resource. Particularly relevant from that article:
My advice is to ignore the composite rate and focus on the 1.2% fixed rate, which is attractive. If inflation continues running at high levels through 2025 and beyond, these savings bonds provide protection in the form of a cash-equivalent savings account that is adjusted for inflation.
At this point, it looks possible the I Bond’s fixed rate could increase at the May 1 reset. For that to happen, using our back-of-the-envelope theory, the 5-year TIPS real yield would need to average at least 1.92% from November to April. That would get you back to 1.3%. At this writing, the 5-year TIPS is yielding 1.99%.
However, because the 5-year TIPS is sensitive to changes in short-term rates, I’d say the 5-year real yield will probably be heading lower.
So it sounds like unless I'm in a hurry to get the ball rolling, there's no harm in holding the cash (say in T Bills) and assessing the situation (read, consulting tipswatcher's website!) in mid-April. At that point if an increase looks all but certain, I might wait until after the change; if likely but uncertain, perhaps purchase $5,000 as a way of hedging my bets; or if a decrease looks at all probable, then purchase the whole $10,000 before the change. Do I understand?
Thanks again!
“The best criticism of the bad is the practice of the better.” —Richard Rohr
Funny thing, I actually put in an order today for one set (wife's account) to be purchased on Jan. 29. So I am not (technically) following my own advice. The reason I did that is because I bought the regular set of two $10,000 I Bonds last year, plus delivered two sets of gift box purchases in 2024, so we purchased $30,000 each. All those were the 1.3% fixed rate. I wouldn't have delivered those except for the TreasuryDirect email suggesting I do it.
So the question was going to be: Will we be prohibited from buying I Bonds in 2025, which as been the "sometimes" advice people get when contacting TreasuryDirect? (Other times, it's the opposite advice.) I will be posting my findings (which I would say are still inconclusive) in an article Sunday morning. However, at this point, that purchase was totally routine. No warnings, no acknowledgement of what happened in 2024.
--Note: I can cancel that purchase any time before Jan. 29, which I may still do. But I guess completing the purchase really won't happen until that day, so I'll probably let it go through for the sake of collecting information.
tipswatcher wrote: Thu Jan 02, 2025 3:29 pm
Funny thing, I actually put in an order today for one set (wife's account) to be purchased on Jan. 29. So I am not (technically) following my own advice. The reason I did that is because I bought the regular set of two $10,000 I Bonds last year, plus delivered two sets of gift box purchases in 2024, so we purchased $30,000 each. All those were the 1.3% fixed rate. I wouldn't have delivered those except for the TreasuryDirect email suggesting I do it.
So the question was going to be: Will we be prohibited from buying I Bonds in 2025, which as been the "sometimes" advice people get when contacting TreasuryDirect? (Other times, it's the opposite advice.) I will be posting my findings (which I would say are still inconclusive) in an article Sunday morning. However, at this point, that purchase was totally routine. No warnings, no acknowledgement of what happened in 2024.
--Note: I can cancel that purchase any time before Jan. 29, which I may still do. But I guess completing the purchase really won't happen until that day, so I'll probably let it go through for the sake of collecting information.
I will be interested to know what happens. We each have 3 years worth of I Bonds for each other in our gift box undelivered. We may buy another years worth of I Bonds each this period as the 1.2% fixed rate is still pretty good.
I redeemed my last set of zero percent fixed rate I-Bonds yesterday. The money arrived in my bank account today, even though TreasuryDirect had indicated that money will arrive on Jan 3rd. Nice
Just got a survey from Treasury Direct asking about the gift program and a potential change.
Specifically:
In the future, there may be a window of time in which a gift bond must be delivered and accepted. If the gift is not accepted within that timeframe, the gift bond would become the property of the gift giver and can be redeemed or kept by the gift giver. The following questions are about gift delivery timeframe.
There was also a question asking if I had any un-delivered gift bonds in my gift box.
icrf wrote: Wed Jan 08, 2025 5:02 pm
I was hoping gifts would go away entirely and they'd just increase the annual allowance per individual. Seems far simpler.
Me too. With the elimination of the 5K from tax refund, would be nice if they increased the purchase limit.
AssetClassJunkie wrote: Thu Jan 02, 2025 11:38 am
Now that I Bond quota have been reset for the new year, I'm wondering if it makes more sense to purchase as much as possible immediately now in January, or to wait until immediately before or after the next rate change on May 1?
My thought process was that buying immediately would be beneficial because it gets the clocking ticking on when I can redeem (minimum of 1 year wait), but I also know it's possible that both the fixed and variable rates will change. Are there reasonable anticipations of what directions those rate will go? What are any other important reasons one might wish to purchase immediately vs. wait? Thanks so much!
I'm waiting until we know the final inflation numbers as well as the guess at the fixed rate.
The one-year countdown is not a big concern because it's "only" $10,000; I have other sources if the situation were truly dire.
AssetClassJunkie wrote: Thu Jan 02, 2025 11:38 am
Now that I Bond quota have been reset for the new year, I'm wondering if it makes more sense to purchase as much as possible immediately now in January, or to wait until immediately before or after the next rate change on May 1?
My thought process was that buying immediately would be beneficial because it gets the clocking ticking on when I can redeem (minimum of 1 year wait), but I also know it's possible that both the fixed and variable rates will change. Are there reasonable anticipations of what directions those rate will go? What are any other important reasons one might wish to purchase immediately vs. wait? Thanks so much!
I'm waiting until we know the final inflation numbers as well as the guess at the fixed rate.
The one-year countdown is not a big concern because it's "only" $10,000; I have other sources if the situation were truly dire.
I'm not in the I-bond market now that TIPS rates are what they are, BUT consider this....
With some bank interest rates around 4.5-5%, why not just wait it out until late April when you have a good idea about the new rates?
What do you have to lose?
I think that is what exodusNH is saying as well.
Lots of details when it comes to I Bond timing as I've followed this for years, which I completely understand. But at this point, I just buy when convenient, and am not timing my days/weeks/months. I maxed out on Dec 30, and will probably buy more this year--depending on what needs I have for emergency funds.
I'm waiting until we know the final inflation numbers as well as the guess at the fixed rate.
The one-year countdown is not a big concern because it's "only" $10,000; I have other sources if the situation were truly dire.
I'm not in the I-bond market now that TIPS rates are what they are, BUT consider this....
With some bank interest rates around 4.5-5%, why not just wait it out until late April when you have a good idea about the new rates?
What do you have to lose?
I think that is what exodusNH is saying as well.
That's exactly what I'm saying.
If I had a place to hold TIPS, I would. But my 401k doesn't have them; my only IRA is Roth, which would be a waste. I can't keep a traditional IRA because of the pro-rata rule.
I'm not in the I-bond market now that TIPS rates are what they are, BUT consider this....
With some bank interest rates around 4.5-5%, why not just wait it out until late April when you have a good idea about the new rates?
What do you have to lose?
I think that is what exodusNH is saying as well.
That's exactly what I'm saying.
If I had a place to hold TIPS, I would. But my 401k doesn't have them; my only IRA is Roth, which would be a waste. I can't keep a traditional IRA because of the pro-rata rule.
Are you opposed to holding them in taxable? Unless your tax situation makes it undesirable, I don't really see much of a down side.
If I had a place to hold TIPS, I would. But my 401k doesn't have them; my only IRA is Roth, which would be a waste. I can't keep a traditional IRA because of the pro-rata rule.
Are you opposed to holding them in taxable? Unless your tax situation makes it undesirable, I don't really see much of a down side.
Current fixed rate is 1.2%, and TIPSwatch has some back of the napkin math that says it *could* be 1.3% come May. I’ve been buying in January the past few years (except my first in 2021) and like the idea of staying on the same schedule until forced to change but don’t mind sliding a little.
Retiring this year so this will be my last fresh purchase as part of a bond tent ladder. Starting next year I will redeem my first in April when it hits its 5 year mark and decide to keep or reinvest depending on if I get bored and get a job again.
.1%, if it happens, doesn’t seem to be worth chasing for short(er) timelines of 5 years or so but wanted to see what others thought.
honigvod wrote: Sat Jan 11, 2025 3:15 pm
Any suggestions on when to buy in this year?
Current fixed rate is 1.2%, and TIPSwatch has some back of the napkin math that says it *could* be 1.3% come May. I’ve been buying in January the past few years (except my first in 2021) and like the idea of staying on the same schedule until forced to change but don’t mind sliding a little.
Retiring this year so this will be my last fresh purchase as part of a bond tent ladder. Starting next year I will redeem my first in April when it hits its 5 year mark and decide to keep or reinvest depending on if I get bored and get a job again.
.1%, if it happens, doesn’t seem to be worth chasing for short(er) timelines of 5 years or so but wanted to see what others thought.
I'd agree that 0.1% difference in the fixed rate won't make much of a difference. I am fine with buying in January, near the end of the month, of course. But I'd prefer to buy in April when I can get a better idea of both the future variable rate and fixed rate. And of course, you will want to keep an eye on TIPS yields to see if the yield gap is continuing to widen. If so, consider individual TIPS held to maturity.
Does anyone know of a calculator where one could compare IBonds to TIPS yield in a taxable account? I'm wondering how much of the spread between IBonds and TIPS is minimized with the tax drag of TIPS.
Is there a website or post somewhere in here that shows the steps to do iBond gifting to a spouse and how soon we can transfer all those gifts?
I guess I was under the impression we could only transfer 10k in gifts per year, so I never did it before. But if we can now transfer more than that at a time, I'd like to consider this gift box thing.
Is it as easy as I can sell my current 0% iBonds, then buy as many gift iBonds as I want? Then I can immediately deliver all those gifts as long as we haven't purchased our $10k allotment for the year?
Bought first $20k in ibonds last year (married couple). Intend to do so again this year. Will likely do so every year for the foreseeable future. They will be my EF and, after that amount is reached, they'll be part of my bond allocation.
Gadget wrote: Sun Jan 12, 2025 6:26 pm
Is there a website or post somewhere in here that shows the steps to do iBond gifting to a spouse and how soon we can transfer all those gifts?
I guess I was under the impression we could only transfer 10k in gifts per year, so I never did it before. But if we can now transfer more than that at a time, I'd like to consider this gift box thing.
Is it as easy as I can sell my current 0% iBonds, then buy as many gift iBonds as I want? Then I can immediately deliver all those gifts as long as we haven't purchased our $10k allotment for the year?
Would you like to execute such a strategy and let us know the outcome?
Gadget wrote: Sun Jan 12, 2025 6:26 pm
Is there a website or post somewhere in here that shows the steps to do iBond gifting to a spouse and how soon we can transfer all those gifts?
I guess I was under the impression we could only transfer 10k in gifts per year, so I never did it before. But if we can now transfer more than that at a time, I'd like to consider this gift box thing.
Is it as easy as I can sell my current 0% iBonds, then buy as many gift iBonds as I want? Then I can immediately deliver all those gifts as long as we haven't purchased our $10k allotment for the year?
Harry Sit on The Finance Buff website offers a primer on the exact way to make gifts here. It has been linked before:
However, last fall Treasury Direct began emailing their clients who were holding gifts in their accounts and telling them they could deliver all gifts early - not waiting for the following year and a new $10,000 limit. With this came the expectation that there would be new rules or a system for gifting coming out in 2025. January 2025 is here and as far as I'm aware no rule changes from Treasury Direct.
Tipswatch is another site to look at (another poster on Bogleheads):
My spouse and I use I Bonds for our inflation-protected funds and had 6 years of I bonds at 1.3% fixed waiting to be transferred to each other every year until 2030. We delivered these last fall after the TD email. We have no tax-deferred space for TIPS and I Bonds are an excellent substitute.
...it is madness to risk losing what you need in pursuing what you simply desire. Warren E. Buffett
I wasn’t aware that ibond redemptions are run through a federal clearing house checking for any outstanding federal or state debt. The amount of debt owed is deducted from the ibond redemption before it hits your checking account.
The DC government assessed me for the taxes they thought I owed in 2018 and in 2024 sent tax notices to an address that was 6 years old (and at least 3-4 moves ago). When i didn’t respond, they filed a tax lean against me and took close to 9K from my ibond redemption before it hit my checking account. I was Active Duty Military at the time and paying taxes to my home state and not to DC, even though I was living in DC which is legal and very common for Active Duty folks.
So now instead of getting my ibond redemption I am uploading paperwork to the DC my tax portal trying to get my money back. Definitely turns me off to any investing through treasury direct in the future!
pete1983 wrote: Mon Jan 13, 2025 4:52 pm
Bad experience redeeming my I bond.
I wasn’t aware that ibond redemptions are run through a federal clearing house checking for any outstanding federal or state debt. The amount of debt owed is deducted from the ibond redemption before it hits your checking account.
The DC government assessed me for the taxes they thought I owed in 2018 and in 2024 sent tax notices to an address that was 6 years old (and at least 3-4 moves ago). When i didn’t respond, they filed a tax lean against me and took close to 9K from my ibond redemption before it hit my checking account. I was Active Duty Military at the time and paying taxes to my home state and not to DC, even though I was living in DC which is legal and very common for Active Duty folks.
So now instead of getting my ibond redemption I am uploading paperwork to the DC my tax portal trying to get my money back. Definitely turns me off to any investing through treasury direct in the future!
Very sorry to hear this. Just wanted to thank you for your service to our nation.
Active duty personnel should never have to go through this sort of thing. Perhaps your congressman/congresswoman can intervene?
Retirement is best when you have a lot to live on, and a lot to live for. * None of what I post is investment advice.* |
FIRE'd July 2023
