I Bonds

This page is for discussion of I Bonds which are issued by the U.S. treasury.

I Bonds have a ‘fixed rate’ portion and an additional portion which is adjusted twice per year at a rate dependent upon the rate of inflation.

The current interest rate on the bonds is 7.12% through 4/30/2022 after which they will adjust for the next 6 months. It is estimated that the new interest rate will be in the 9.5% area.

You can buy these bonds on the Treasury Direct site — here. All the details are on this page and there are penalties for early withdrawal so make sure you check out the details.

You may purchase up to $10,000 annually – a couple can have 2 accounts and buy $20,000 total.

372 thoughts on “I Bonds”

  1. Anyone looking at TIPS? I’m looking at possibly throwing a decent chunk at the 10yr TIPS, CUSIP 91282CJY8, tad over 2% YTM @ current price of $97.771

    1. Pig, I own a few 2027-28 TIPS. Since this particular issue is under par, you arent exposed to any real deflation issues that could ensnare TIPS unlike IBONDS. But if you are planning to hold until maturity and will not blink, this clearly is better value than an IBOND. I just didnt extend out far because I would be afraid I might blink as these will show more pricing volatility than a shorter duration one. That is just a personal mental issue. I know you know this but, in all simplicity, If one is buying a 2% TIPS, they are betting inflation over next 10 years is higher than 2.3%. As ~4.3% is the fixed benchmark comparison of the 10 year treasury.

      1. Grid, as always thanks for your reasoned input. TIPS one of those things I never got into as I was dabbling in other sandboxes. I-Bond not an option for me as my options are limited in the taxable world. Besides, pig pile Sr. has that aspect of the market covered!!!

        1. Pig, just make sure you doing enough investing in the “right areas” to stay in Papa Pigs good graces and stay in “The Will”, ha. I have only dribbled around the edges today. Im belching from CDs still, so I rounded up today to a 20k position of the Barings 2029 7% bond which is plenty enough for me. I got 7.1% YTM, but should have just bought them all when I previously bought at 7.15%. Oh well. Added a couple hundred more to my “fake news” NSS money market under $25.90. Bought a big slug in 25.50s a week or two or so ago. Hoping the merger drags out a while or long enough for something I want to own long term to drop and then use those proceeds. It certainly wont be Babcock and Wilcox common, preferreds, or debt though, ha.

  2. With one month cycle left, next IBond adjustable rate isnt going to be as painful as it was projecting earlier. A couple months ago it was heading for around 0% plus fixed. For now, if next month is 0% which isnt likely it would be 1.64% plus fixed. FWIW, Tipswatch is projecting the variable component to wind up in the 2.4% to 2.8% annualized range.

      1. No, Danzeb, that would be 2.94% annualized. This 6 month IBond CPI cycle is “off kilter” from annualized CPI being reported.

  3. 1. Buy $10k Gift I-Bonds for spouse
    2. Two years later, the $10k has accrued and compounded interest and that tranche of I-Bonds is valued at, say, $11,500.
    3. This year I want to gift I-Bonds to my spouse rather than use new money.

    Question: Am I able to gift the entire $11,500 balance? Or am I limited to gifting her only $10k and must therefore hold the $1,500 back in the original gift account?

    1. No, the whole enchilada goes to her. And still tax deferred until she cashes it. See it was hers the minute you put it in the gift box, she just didnt have access to it. Just like me when I was 16 and paid for my own car with my own cash, but still got my keys taking away from misbehaving. So it was mine, but I had no access to it, ha.

      1. Perfectly clear, thanks: I made a gift of $10k, now two years later I’m transferring that entire gift to her … along with it’s accrued interest.

        Next question: is the 3-month penalty applicable when delivering a gift?

        These I-Bonds were purchased less than five years ago. Will TD doc 3 month’s interest when I transfer the gift?

        I am assuming the answer is ‘no’, since the recipient is not *redeeming* the gift?

        1. Yes that is correct. Funny, I just bought $5k so I wouldn’t change my mind and will buy $5k later. And then have GF gift 18k. I still have a 0 fixed trapped in the box and will have to wait another year.

        2. Interest is calculated from purchase date to redemption date. Gift delivery or other transfers don’t affect the interest amount.

          1. Interest I think is calculated from the first day of the month you purchase no matter what day of that month you actually purchase….

            1. You are correct, 2WR. Its not when you buy but from 1st day of the month in which you bought. I typically buy late in month, but had free cash from dumping some things recently, so I put some in there today.

        3. Your interest has already been docked. They always withhold the last 3 months interest until 5 yr anniversary. When you first bought you didn’t receive any interest until the 4th month was completed.

          1. Grid, I find it useful to envision the delayed interest as receiving 6 months’ interest in the last three month’s of the 5-year term.

            Like you have been contemplating rolling over the 0% fixed, but then I started thinking about the taxes…and that I-Bonds compound the interest (increasing the APY)…and the latest chit chat about inflation and the deficit and that I-Bonds are bullet-proof in any storm.

            Just thinking out loud here…already have plenty ‘o cash on-hand being added-to via years of maturing CD/Treasury ladders..and because the I-Bonds occupy a small corner of holdings – maybe a good strategy for us is to let them sit there running a relentless tax-deferred ultra-safe accrual until something breaks in the market – when we’ll then have a huge arb opportunity. Especially as just not that excited about anything offered in the pfd, debt or equity buckets right now.

            1. Alpha, I couldnt help myself. I had GF gift me rest of 0% IBonds. It went through just fine despite already purchasing my limit this year. Now I am going to recycle it all back into another gift purchase from her to me, so all the money is on the 1.3% fixed. It was worth it to me to pay the taxes and get the higher long term yield going forward.

              1. Ha! Did similar last week rolling 2 of the early 0% into 2 more 1.3% fixed. Now have four 1.3% fixed and will add two more closer to May 1 when we confirm not going higher.

                You’ll have to let me know if you receive any follow-up on the gift assignment. I’ve been looking at them and pondering an exit.

                Those 0% fixed were excellent performers. Started 7.something, then to 9.something, then 6.something – and now out – with zero risk and guaranteed principal. High-five Grid!

                1. I really think you can buy 10k then accept a 50k gift dump all in same year. It worked for me at 20k. Several people on other forums said they did it no problem. And I think people just assumed it would take years to unwind gifts. But it doesnt appear that way. They actually only say if you get a 10k gift you cant buy any that year. But its actually silent on accepting gifts AFTER you have purchased the limit. It never says they wont go through….And they do.

                2. A – not to be ignorant, but what do you actually mean by having “rolled” the 2 o%’s? Does that mean that you somehow did something to sell the 0’s and buy 1.2%’s without the buys counting against your yearly 10k limit? And what did you do with the interest amounts that accumulated from the 0’s that meant you had over 10k in each? Did that add money leave TreasuryDirect or go toward purchase of other non IBond Treas? What you and Grid seem to be managing to do is making me second guess my KISS strategy toward just annually buying IBonds for me and my QVC Queen.

                  1. I think you are over thinking what I was saying. I bought 10k of the 1.3% this year already. But I had GF deliver me my gifts held in her account. TD allows the transaction to occur. Now I will sell the IBonds into my bank account and repurchase the 18k gift limit for my GF as she will vice versa also. So in other words we are cleaning up all the 0% stuff and immediately converting to 1.3% fixed dispite having already purchased the annual limit prior. …If I/we had gifted first, we wouldnt have been able to purchase the $10k. But since we bought first and deilvered gifts afterwards you in effect can purchase more of the 1.3% all while ridding ones self of the 0% ones.
                    Also, yes I just dumped the entire thing including accrued interest into my account.

                    1. Grid, no thoughts on the sell triggering a taxable event? It’s why I just leave my 0% fixed and am happy they are just tax differed. Hoping this message find you well, A

                    2. Azure, we have a federal deficit and debt problem. I am doing my patriotic duty to pay more taxes to help, ha. Seriously though, yes I will pay, but that was going to happen inevitably, as I am ensconced in the 25% bracket. I can never manipulate my income anyways. And they could go up after 2025 if Trump tax cuts are allowed to expire. But largely the additional 1.3% will make up for the 0% fairly quickly. Plus I jump to 5.27% now and am off the 3.4% that the 0% was paying. Only paying 2 years or so of income tax anyways, so its not like its a 10 year accrued hit or anything. For me if I am in them for the long run, I want the highest yield possible for the longest time.

                    3. Who me???? Over think into not pulling the trigger when perhaps I should? Nahhhhhhh, not me, never happens… ha!

                      But I was actually asking about the mechanics of what Alpha did… Having not gifted anything to anybody other than my kids, I’d definitely have to file away the thought of having to time gifting or receiving gifts vs when to buy outright for future years. Whatever Alpha did, maybe I can act as if I was a Harvard president and plagiarize it this year..

                    4. 2WR, Its real easy to gift. We just both did 10k today to each other. Both gifting and delivering is a simple process. I am going to have her gift me $8k more, but she is stopping. This will give me almost $40k of the 1.3%. I still have some .4 fixed ones too I havent determined what to do with. But I am out of the 0% ones now.

                    5. What I’ve thought in the past, Grid, was by gifting you were piling up what you could gift in the future at a rate of no more than 10k per year, but what you’ve found out is that there’s a way to work around that limitation… What I didn’t want to do was buy 50k in gifts, for example, that would require 5 separate actions over the next 5 years in order the finalize what you’ve gifted… You think of those kinds of things at my age….

                  2. 2wr, Sold 2 of the 0%s. That interest is now Fed-taxable. Used the $20K proceeds to buy two 1.3% IBonds. Had two 1.3% IBonds from late 2023 (bought as gifts) so now have four. Buying two more 1.3% IBonds as gifts by April bringing total 1.3% IBonds to six.

                    The new purchase was within contribution limits (including gifts). Simply arbitraged an older IBond into permanent 1.3% bump in the yield.

                    Could have bought the new 1.3% IBonds via new contribution though was seduced by the thought of rolling the same loot into higher yielders.

                    These super-safe inflation hedges may return to rock-star status and retain that status for an extended period of time. Subject to the contribution limits and balanced against alternative investments; accumulating IBonds with that thought.

                    1. Being husband and wife you two in theory could unlimited gift each other and then dump them all out of the gift box too. Im limited being not married. But actually we could gift more, I just dont want to go over $18k and fill out IRS forms. Being married you dont have too.

                    2. OK, thanks for clarifying, Alpha…. So making up numbers, you sold 11,000 of IBond 0%, bot 10k of the 1.20% newbies, and the $1k in proceeds escapes the Ibond cycle and gets taxed to boot right???? Or is that an oversimpification?

                      No question I could be entirely wrong on this as I haven’t really thought this out thoroughly (do I hear you say “overthought,” Grid?), but isn’t there something to be said about the power of compounding interest when you start out the cycle at the gigantically high levels we all did when we initially bot the 0%’s?. By walking away from them to get taxed now (and give up 3 months of interest as well), aren’t you sacrificing some of the magic of compounding???? If we first bot the 0’s after the magic days and missed the high rates of return at the beginning, then it makes more sense to me to give them up now on the surface, but having bot at the absolute best time ever to buy IBonds, it just feels as though it’s not worth it to seel them out and replace them… Granted this is gut feel only.

                      Speaking of the “best time ever” to do or be X, Y or Z, have any of you fellow football or basketball or other sports TV viewers noticed how practically everybody or every team any sports commentator talks about during a game these days is the best XYZ in the history of the game to ever do this that or whatever???? As an example the other day UTenn got hammered by Texas A&M on the basketball court Saturday….. But then again, of course they did. According to the commentator Texas A&M had the best basketball player at “turning the corner” who’s ever played the game in the history of the entire universe playing for them. How can you compete against such greatness? And how many times did Tony Romo described somebody/anybody he was talking about, either a player on the field or a coach looking down at a laminated piece of paper on the sidelines (how exciting!) as the best at something in the NFL….. Ooops! I digress, but at least it’s not politics….

                    1. PP – Yikes NO… Long time III’ers know my history with QVC and, like UT vs Texas A&M this time around, my history on QRTEP has a lot to do with me getting hammered – and not in the fun way either . It was my experiment in following the Peter Lynch “Buy What You Know” theory of investing based on how active my wife has been buying QVC stuff over the years….. Let’s just say if Mr Lynch was a pro golfer approaching the 16th green at the Phoenix Open, I’d be booing him before he chose his club for his shot to the green in the Coliseum based on this Lynchian experiment …. I’ve kept 100 shares just to follow it and did manage to sell everything else in the mid 80’s price range, but still the killing that was made on owning QRTEP was me… I realize if I was willing to hold I should have also been willing to add at some point during this debacle, maybe even attempting to trade my way out of this mess, but I didn’t. I just conceded and kept a trophy 100 as a reminder..

      2. Hello Grid ~
        *If I may confirm*
        Maxed out I-Bond purchases thru various entities at high inflation,
        put a bunch (filed gift tax return) in older family member gift box for myself understanding if granny took the big trip, my gift box will be delivered to me all at once penalty free.
        Am I to understand: unlimited contribution to gift box at high interest base rate (file gift return)
        Then hypothetically deliver everything, empty out that entire gift box any time… interest penalty if applicable.
        Or like Azure – leave existing I-Bonds at TD indef… set & forget.

        My only real I-Bond concern is inflation component # fudging…

        1. Hi Mz G. Clarifying here. Are you asking if you can dump all the gifted bonds in grannys TD account into your TD account at once? All I can say is I had bonds gifted to me after I made this years max purchase and it was no problem. TNT also stated here it was done successfully, and I have read from others who did it too without problem.
          There is absolutely nothing on TDs website stating you cant. It only says you cant purchase any for remainder of year, if you were gifted the annual limit already. It doesnt say the opposite. For me the biggest issue was expediting out the 0% fixed ones and getting them converted into the 1.2% fixed ones.
          I actually have 15k more still in GFs gift box. I only recently purchased them this year. Im assuming I can clear those out also, but just have never bothered her yet to send those since they are already 1.2% fixed.
          So my purpose was really not so much to get them all into my account quickly, as it was more to convert the 0% ones into 1.2% ones. Would buying massive amounts via gift then immediately transferring them into your account 5 days later draw their ire? Maybe, I dont know if money big amounts constitutes poking the pig in the eye or not. TNT implied a larger transfer was made with no problems though.

    2. For those asking about redeeming more than $10K per year. I used our various family trust, professional LLCs, Gifts, etc to the tune of lower-mid six figures. I just spent hours redeeming; absolutely no issue. Ultimately there were two social security numbers and three bank accounts.

      The only caution I have are the passwords. TD required me to update passwords on most. With so many accounts it becomes cumbersome. I went ahead and got the 1099 info for 2024 so I don’t have to try to endure password torture next year.

      Not quite social security age but want to simplify my holdings/estate so doubt I will purchase anymore. Anyway, just a FYI

      1. I did the same, right down to the amounts, except I used the same password for each account. Not the most secure thing to do, but they have two step verification anyway and you have a unique account identifier which is essentially another password anyway.

        I just downloaded all my 1099 information on Friday.

  4. Selling I-bonds question. Decided to sell a paper one with zero fixed. Called
    Chase bank and person had to look it up, but said they could be cashed at local branch. Turns out local branch has limit of 200 on bonds they will cash in. It appears only alternative is to mail them to Treasury Direct.

    Has anyone done this yet? Bonds you cash in person need to be signed, but I cannot find on TD website whether you need to sign bonds you are mailing in. TD help line is backed up.

    1. The instructions are on TD. If you don’t have a TD account, sign up for one first. Then you must open a conversion account and print out a manifest, where you’ll enter the I-bond’s serial number. You sign the manifest but NOT the bond! Repeat, do not sign the bond. Then you mail it to a P.O. box number or Fedex/UPS it to a street address. Then you wait and wait until you get a confirmation from TD that they received it. And then you wait a lot longer before they convert it (possibly 3-6 months).
      Full instructions: https://www.treasurydirect.gov/savings-bonds/manage-bonds/convert-paper-to-electronic/

  5. Treasury just announced next fixed cycle at 1.3% with 5.27% as yield for next 6 month cycle. Very chintzy considering how high the TIPS fixed yield is presently. The Series EE bonds were “raised” to 2.75%. Somebody needs to be dragged behind the woodshed for issuing that yield.

    1. i wonder if it makes sense to switch out of a few zero percent i bonds and buy these
      you would have to pay the penalty. but gaining it back with the coupon
      something to ponder as i probably won’t do it til after the first so i don’t have to pay the tax this year

      1. Definitely worth switching out whether you take the extra 1.3% or just buy something else with the money. Takes 8 months to recoup your 0.85% penalty then you get the higher rate forever, only drawback is you start the 5 year clock over if you buy the new one. I might wait until January to push the tax liability into 2024 but that’s small change.

        1. Playing Devil’s Advocate here, if you’re selling your old IBond from the big yield days and buying the new, then don’t you have accrued from the old that you will not be able to reinvest because of the 10k limit? Isn’t there a compounding factor involved in holding the old one on its own for a while longer and just deciding whether or not the new term’s provisions are good enough to invest in on their own? Either way I suppose were not talking about vast improvements doing it one way or the other.

    2. Grid:

      So if one is unfortunate enough to be stuck with some I-Bonds paying zero on the fixed rate (when some commenters on this site started pumping their benefits), your yield for the next 6 months is a paltry 3.97%.

      That is almost criminal. Treasury Direct is going to likely get hit with a flurry of selling when 2024 kicks in!

      1. I dont agree with that assessment at all. My woodshed reference is to the 2.75% Series EE bonds. Its really hard to pump IBonds. It wasnt like the govt slide in a 0% unsuspecting. They are what they are and are determined by inflation plus fixed if given. The purpose of these is different than other investing vehicles. They definitely served my purpose. And I suspect most who held IBonds past 2 years has done considerably better than one who bought and held a fixed perpetual issued 2 years ago.
        I still have some IBonds but recently toed into TIPS as the fixed is considerably higher now. But once again, its these are viewed in the context of what specific goal you have for the capital invested.

      2. Yeah – I am dumping all of my and my wife’s I-Bonds on January 1

        They served their purpose for when we had them but the rates (non fixed) they now provide are indeed near criminal

        Waiting until Jan 1 to defer taxes on them since we each have $30K principal plus interest. Even just putting them in a 6 or 12 month Treasury, I will recoup the 3 month penalty rather quickly

        1. Mav, I have two original 10k bought over 2 years ago, Im waiting until Jan. 1 also. I have enough taxes to pay this year already. At that point I will decide whether to repurchase to get the 1.3%, buy more TIPS, or maybe something on market has cratered even more for a good look at.

          1. Yeah Grid – it makes no sense to me to hold them. Even if you still want the money in I bonds, as MartinG noted, you can make up the penalty in about 8 months if you reinvest in Ibonds with the fixed rate

            For me, I never viewed these as a long term hold. I just took advantage of the high rates for when they were around. Now that all of mine have ticked down to the low rate for the penalty period, it is an easy call to swap out of them. So likely will just buy treasuries with the proceeds in January

        2. I have already cashed them out in three accounts and reinvested the proceeds. I have a schedule of when the others roll out of the higher interest rate payments and will cash those out then.

          If the fixed portion gets up more like 2% they may be a long term hold, but less than that and it will just be a safe harbor during the storm for me. I might still get back in at the first of the year if there is nothing else better, but I do not foresee that.

    3. Grid, I want that 1.3% fixed-component and will be going all-in. Equal parts boring and reliable, volatile-free, AAA-rated, guaranteed 1.3% return north of inflation for up to 30 years, guaranteed return of principal, tax-deferred and state tax-free in withdrawal. Also a symmetrical risk set-up, in that one can redeem at any time after one year with no loss of principal no matter what market yields are doing. The beauty in this one I believe is more evident over time and various market cycles. Along with recent adds in treasuries and CDs, another measure of safe ballast that retains optionality.

      Now we can only hope the next issuance carries an even higher fixed component and will go all-in again, averaging up the fixed component…both primary buyers and gifts spread across the annual two 6-month cycles.

      1. Alpha, I almost bought some TIPs yesterday, but backed off. Been thinking for them to really be appreciably important you have to extend out duration. And then that exposes you two different ways to taking potentially big unrealized capital losses. Unlike the IBond brethren which as you stated do not.
        So Im leaning back to adding 10k more at 1.3% with what I presently have and then waiting on gifting closer to end of this cycle. I have some TIPS of about 4 yr duration. But after thinking it over owning of that duration is like being half pregnant. Thinking about just mental accounting of all IBonds as “liquid cash” which allows me comfort of just viewing it as that and not expecting those monies to “perform”.

        1. Grid, You already know I agree. In looking at TIPS the volatility became an issue, whereas the IBond variable rate was almost secondary to that gold-plated 1.3% “forever” fixed over inflation. Hoping for more in April. Love the ballast to holdings and an option to bail-out with all our doubloons guaranteed-intact at any time after one year. IBond “ballast” certainly proved it’s merit over the past 24-months compared to a standard preferred held through that period.

      2. Alpha, I will direct this to you since I am preaching to only one person in the choir….you, ha. To avoid going over the annual gift limits, I had my GF gift me 10k IBonds tonight (then buy and gift more next year before April). Of course if they dont serve a specific purpose they dont need to be bought, but they are filling a niche area for me.
        Just think how much things have changed recently cementing the thought nobody knows nuttin. If one buys the 1.3% fixed with current 5.27% annualized 6 month cycle, and following 6 months cycle inflation is just 1.5% plus fixed; that on a yearly basis will actually earn more yield year one than buying a 10 year treasury bond.

        1. Grid,
          I agree, and I am now wondering if I want to buy some i-bonds with the current fixed 1.3%. But if next cycle’s inflation will be close to 0% (so far inflation has been negative), current i-bonds’ yield after 1 year (when you can sell them) will be only 3% ( 6 months @ 5.27% + 3 months @ 1.3%).

          It is not clear to me if this is a good proposition. Maybe it only makes sense if I replace an older 0% fixed. One day I say do it, the other, I say don’t. Maybe bet that next i-bond cycle will have a higher fixed rate? Any thoughts?

          1. These are not going to make one rich and famous either way. If one wanted them for short term cash like instruments they are likely not desirable now no matter what. For one wanting to buy as long term cash protection from inflation, this 1.3% cycle is what you want for a LT hold. Even if inflation is 0% this cycle. ….The 1.3% fixed is a 15 year high and will drop next time. The TIPs fixed has plummeted from over 2.3% to well under 2%. Unless things reflate quickly 1.3% is the apex and could be under 1% next time. If you are wanting max yield for short term, there are a lot better opportunities outside of IBonds.

            1. Hey Grid. I agree. My I-bonds are all gone and sold. The rates changed like the wind. I cant believe how low they have become.

            2. Grid,
              I see your point. Then, if one does want the 1.3% fixed i-bonds for long term, say 5 or more years, and one thinks the 1.3 is so attractive, and one has lots of $ available, then wouldn’t one want to consider buying as many gifts of the current i-bonds, delivering them one by one throughout the 5 or more years?

              I resist a bit on having too many gifts waiting- even when the rates were >7% I only “dared” to have 2 years’ gifts in my “gift box”.

              1. Yes, DD, exactly. If all the ifs fit your objective…If you want IBonds long term, if you can get them in the gift box, if you feel comfortable with them staying in there several years to unwind. I myself didnt gift a lot on the zero fixed either. I am planting the flag here on the 1.3%. Im kind of limited having to do it through a GF since I dont have a wife. $18k is the limit to gift annually this year without having to fill out IRS forms. A husband/wife dont have the same limit problems.
                I have heard from a few people online that the system allows you to dump gift boxes all in a year. I havent tried it. But if you read between the lines it doesnt really come out and say you cant. Only that delivery of gifts counts against ones own 10k annual purchase limit.

                1. Grid,

                  Thanks for your replies.

                  Regarding the gift delivering limitations: I have seen so many commentaries about this because TD is not very clear. I’ve read people purchasing more than 10k and some report being rejected weeks later, but haven’t seen no one delivering more than 10k and then rejected. I may try it to see what happens. I don’t understand why the website would allow you to do something that should not be allowed; it is such a simple check for TD to know how much the recipient of the delivery has received or purchased the current year and reject your request the moment you click “deliver”.

                  Regarding the $18k gift limitation: my understanding is that you can give 18k to any person each year without reporting and without taxes, but you can still give ANY amount without incurring taxes, you just have to report it so it is deducted from your lifetime exclusion (which I think is $12M). But I am not an accountant and only express my understanding which could be wrong. Any tax experts here in III to comment on this?

                  Bottom line: if I am right and you want to give your GF more than $18K you only need to fill a (simple) form to report it on your next return. (If you have more than $12M to give, then you should do tax planning with some expert, as you probably would be taxed for gifts above the $12M. But I am sure that if you have >$12M you already have expert advise and don’t need to read this).

                  1. Yes, my understanding mirrors yours. I just dont like to fill out forms. And 18k is largely “good enough” for what I want anyways. I gifted these last year too. So about 50k of 1.3% is plenty enough me. Im not personally worried about ever having $12 million. That is a “problem” for other people, not me!
                    The mischievous in me wants to try and send them all. But, since I dont need the money and dont want her catching TD wrath, I will just wait.

                    1. Grid,
                      I am with you about not enjoying filling extra forms and having the irs accounting my gifts. Me too being mischievous tells me that I may try it, as any TD wrath would probably be directed at the giver and not at the recipient (but you never know with TD).

                      After these considerations and your comments, I will at least replace some of my older 0% fixed bonds which would like to hold long term with gifts at 1.3% to wife and children : Forfeiting 3 extra months of interest on the new bonds is not an issue in the long term and neither is the forfeiting of the tax deferral of the 0% bonds, which I will have to pay in 2024.

                      Thanks for all your comments!

                    2. Dd, ya gotta report back here if you decide to let all the gifts fly at the same time. Me gots ta know if the outcome mirrors what I have read! I have one 0% fixed still hung up in gift box. The 3month penalty has always been withheld so I wont miss what I never had. I think its heading past year 3 but doubt its worth it to hold 5 for the withheld 3 months. The 0.4% one is also dead man walking once it starts paying the upcoming cycle which will be poor.

                    1. referring to today’s article. Had to laugh at this one gem of a quote, “I’ve never thought I bonds were a good place to park cash”. Maybe I should direct him to pig pile Sr.’s I-bond cash hoard so he can see the other side of that opinion.

                      Funny and true story, pig pile Sr’s father (I’ll call him pig pile Grand Sr.), wrote him a letter when I-bond announcement came out. Told him he would write him out of the will if he passed up that opportunity. Thus pig pile Sr. complied.

                    2. Pig, and such the reason history could repeat itself. So, even if IBonds were the last investment on earth you would buy, Pig, please tell Pig Sr. that 1.3% fixed looks mighty juicy. And then say we both need to take a big bite out of that apple and enjoy it! It should do wonders for you staying in the will, ha.

                    3. Grid,
                      Thanks for the links! The article actually reiterates what you have been writing here.

                      Some comment the use of trusts as an alternative to filling your gift box and to buy beyond the 10k purchase limit. 2 years ago I actually succeeded to talk with someone at TD (after hours of waiting and with a “nasty” operator) and asked what happens if you have many different trusts, and I think the answer was that if they check you and decide that you are abusing them, they would return your purchases without interest.

                      As for delivering more than 10k/year gifts, I will report when (and if) I do it. I can report today that last year I inadvertently delivered 2 $10k gift i-bonds to my same child, and nothing bad happened (thus far….).

                      Somewhere I also read that although they don’t automatically enforce this delivering gifts rule, they can “investigate” your transactions (like with multiple trusts) and if they decide you have deliberately abused the system, then they may take action. Probably this is to avoid big investors trading i-bonds in the millions, idk.

                  2. DD
                    I accidentally exceeded the 10K limit. I thought they didn’t notice but after a few MONTHS they notified me of the error and returned the 10K. It’s hard to believe that their software doesn’t automatically reject an excess purchase.

                    1. danzeb,

                      Yes, it is really weird that they don’t automatically do it. It looks like they have some people manually reviewing the transactions.

                      Because they returned the 10k to you, it seems to me that you exceeded the 10k limit on purchases of new i-bonds , or was it in delivering gifts?

                      I have read about cases of the former, but what seems unclear is what happens if you deliver gifts to the same person above the 10k. Also hard to understand is how they would manage the following: say somebody delivers a 10k gift to you, and later on the same year, another person delivers you a gift for another 10k.
                      At first they would allow the second delivery, and then later will they return the i-bond back to this second person gift box? What if you had already redeemed both the delivered i-bonds?

                      D

        2. oops! Just saw this post grid. Yes I agree. And so peculiar to recognize I-Bonds also trounced pfds for the last 24 months. This 1.3 fixed, I’m going all-in with four adds via the 2 base and 2 gifts – wish we could get more of it. Meant to be ultra-safe low yielders, they my trounce yet again – if by nothing else – not losing ground in a downdraft market – which is where a golden arb opportunity may present itself.

          I’ve found a great deal of success has been found not in simply in locking in good yields, but equally as important as never having to sell at a loss.

          1. Alpha, we are of course preaching to the same choir here, ha. For 15 years I said if I could get a 5% noncallable I would buy a chunk. It happened briefly Oct. of 22 and I blew it. The same opp came up this past March and I didn’t blink this time. Same with IBonds. I owned a few years 10 or so years ago and then sold because they were 0% fixed. And said I would buy LT if 1% fixed plus ever showed up. It did and now I got as much in last year and this year as I could. It will take a few years to unwind out of gift box, but I don’t care.

  6. It appears I-bonds I purchased back in 10/1/21 and 1/1/22 (issue dates) have finally reached that critical point I can redeem them without losing any of the larger yields. It was the 1/1/22 purchases that I was waiting on. I found this website below valuable.

    https://www.investopedia.com/want-to-cash-in-your-i-bonds-heres-the-best-time-7969282

    So I will wait until Nov 1st 2023 to redeem on the first of the month because you do not get paid for a partial month if you redeem Nov 27th for example.

    I will wait to see what the fixed rate is going forward to determine any future purchase but I have the feeling my I-Bond adventure is over for now.

    1. Another factor to consider is whether you want the interest on this year or next year’s taxes.

      1. Close call. Push interest into next year at the cost of a few bucks interest? I couldn’t decide so I’m doing half and half.

  7. Fixed rate on November’s I Bonds could exceed 1.5%

    From Barron’s:
    New Rate on Treasury’s I Bonds Could Rise Past 5%
    The new rate on Treasury Series I inflation-linked savings bonds could come in at more than 5%, based on the September consumer price index reported Thursday.
    The Treasury sets a new rate on the I bonds every six months, and the next one is due to be announced around Nov. 1. The current rate of 4.3% will be in effect for I bonds purchased until the end of October.
    The new rate will be based on the six-month change in the CPI ending in September, without seasonal adjustment, plus a fixed rate that has yet to be determined. 
    The six-month change in the CPI was 1.97%, Barron’s calculates. That amount is doubled to 3.9% to arrive at the inflation component of the new rate. The fixed-rate component of the new I bond rate, which doesn’t change over the life of the bonds, could exceed 1.5%, Barron’s projects. 
    The fixed-rate component of currently issued I bonds is 0.9%. But since that rate was set In May, real yields on Treasury inflation-protected securities, or TIPS, have moved up by around one percentage point to near 2.3% for the 10-year maturity. 
    The new rate on I bonds will apply for the first six months that an investor holds them and then reset every six months based on the CPI. I bonds mature in 30 years but can be redeemed after 12 months. Investors lose a quarter’s interest if the bonds are cashed in before five years.
    I Bonds were very popular in 2022, when inflation was running hot. The I Bond rate was 9.6% from May through October of that year. But demand has waned, partly because of the drop in inflation since then, but also as a result of the sharp rise in short-term rates to 5%, which has increased the popularity of money-market funds and Treasury bills.
    I bonds are only available through the TreasuryDirect website. Individuals are limited to $10,000 in annual purchases, but those with businesses structured as certain partnerships can get around that cap.
    Semiannual interest is added to the principal value of the bond, compounding over the life of the bond. This differs from Treasury notes and bonds, which make cash interest payments. This is a favorable feature because it eliminates risk on the reinvestment of interest.
    Another appealing feature of I bonds is that holders can defer paying taxes on the interest income until they redeem the bonds. This gives I bonds an IRA-like quality.
    Interest is exempt from state and local income taxes but is subject to federal income tax, which is the same as for Treasury notes and bonds. This makes I bond taxation more favorable than that for bank deposits, whose interest is subject to federal, state, and local income taxes.

  8. Sep cpi-u was .25% and the reset variable 6 months rate for i-bonds will be 1.97%.

    With a (hopefully) close to 1% fixed rate on Nov, this will mean new i-bonds will be yielding ~5%/yr.

    Are any III’s readers still thinking on buying more i-bonds at this rate?
    I might if the fixed rate becomes a bit more attractive, maybe replacing old ones at 0% fixed rate, but will need to wait until the beginning of 2024, although at current rates TIPS may be a better option.

    1. When you say “maybe replacing old ones at 0% fixed rate,” what do you mean? By replacing you only mean selling the old one and using the same proceeds to buy the new one, right? If your old one is less than 5 years old, is it worth it to give up 3 month’s interest and start the 5 year clock all over again? I’ve not put much thought into this but to me the idea of essentially swapping into one that includes paying a fixed rate with an old IBond paying no fixed rate just doesn’t seem to be worth it. Is it the hefty compounding effect that started 2 years ago that makes this worthwhile to do?

      1. I certainly do, 2WR. If we get a fixed closer to 2% than 1%, I will not only redeem the remaining 0’s, I will have my GF gift me 30k to build the fixed stash higher. But I will waiting on redeeming and just focus on gifting until I see what the following 6 month cycle will bring. As I am inclined just to hang on near term the zero at around 4%. I also have a .4% I will continue holding.

        1. Grid, We’re pulling on the same oar.

          What I-Bonds lack in excitement they replace with constancy. While at any given moment they appear to be yield-inferior, they are a hedge against the unknown and a guaranteed positive-return, 100% of capital-intact inflation-beater, especially with the fixed kicker.

          An reliably accretive small corner of holdings.

      2. 2wr,

        That’s the idea, but I have the same questions as you have. I said “maybe”: if I have the cash I may just buy a (or some, via gifts) new one(s) leaving the old ones, but if I need the $, then selling an old one is possible.

        My calculation is: forfeiting 3 months at current rates (and 0% fixed) is equivalent to about 0.85%, which are payed back to me in a few months with the new one. Also to consider when selling is that I would have to pay taxes now instead of continuing to defer.

        If the fixed rate is closer to 2%, as Grid writes, i-bonds become even more attractive to me, as making ~2% above inflation, tax deferred and practically risk free, matches my risk/reward profile. BUT, if this is the case, one has to compare i-bonds with TIPS which at current rates give a bit higher return. However, because I am lazy, the simplicity of i-bonds as opposed to TIPS, makes me want to stick to i-bonds.

        1. Sounds like we’ve got similar approaches…. if I got the cash, the old I’s will remain and I’ll just decide on new ones after the announcement… And as far as TIPS, I’ve never taken the time to understand them – looked at them a long time ago and decided they seemed to be way to back end loaded to be worthwhile but always felt I was missing something in thinking that way… So I don’t consider them to be much of an alternative.

          2% fixed will do it for me too…..

          1. 2WR, The TIPS have a considerably higher fixed than IBonds. Well over 2% currently. But they have more pricing volatility and are subject to possible big losses if sold before maturity. I bought some a little while back with a fixed of 2.2% just under 5 year maturity. They are probably a bit under water now. But if held until maturity this will not happen. Thus my personal preference not to extend duration long with these.. The IBonds have a lower fixed, but the main positives are ones capital is never at risk if one sells, and the income can be deferred until one sells.
            With TIPs one only gets the fixed component interest given to them. At maturity, a TIPS investor will receive the original face value plus the sum of all the inflation adjustments since the bond was issued.

            1. Hence a good description of the back-end loading I thought I remembered as the reason for me deciding to ignore TIPS… Thanks, Grid. How long ago is “a little while back?” Because I’m thinking here we’ve been thru a huge inflation uptick cycle the past 2 years or so, a time that you would think was meant for TIPS investing and you’re slightly underwater? Case closed..

              1. No, I mean like a month or two ago. I just checked and it appears to be near where I purchased it. But I bought one well under par with a lower fixed and it matures in 4 years I just checked. Its only $20k and its in my account that got moved to Schwab, so I rarely open that one up.
                But yes, unlike IBonds you dont get all the money upfront. You have to wait until maturity. Though I suspect it gets baked into the issues price.

                1. I’m guessing I’d be as equally amused as I’d be by smelling the bouquet of a dead beer bottle with a butt in it after a frat party….. ha….. there’s just something about TIPS that I just don’t want to understand I guess…but thanks for thinking of me…. lol

                  1. At the end of the day if held until maturity, they are easier to understand than making a spreadsheet, ha.

                    1. I just noticed a Dear Abby type Marketwatch article about buying and then having forgotten about an IBond that mentions what might be a handy little calculator that can give you your exact performance on either IBonds or TIPS calculated based on the exact month you originally bot them – The article is https://www.marketwatch.com/story/i-bought-series-i-bonds-then-forgot-about-them-are-they-still-worth-anything-or-should-i-sell-them-bd4556c4 and the truly barebones calculator is http://eyebonds.info/ . Ever heard of it? It’s simple as all get out but looks like it could be a handy dandy little tool to keep in mind your actual yield and compounded amount achieved over the time you’ve owned either…

                    2. The key part to the article for buy and holders through duration looking to compare the two is this…..
                      The way Erhart thinks about I-bonds is that you’re getting the rate of inflation plus a fixed rate, and that fixed rate is what compares to the real yield on TIPS. “I-bonds are at 0.9% right now and TIPS are at 2.5%, so you’re getting basically triple the real rate of return,” he says.
                      ….But I expect that spread to narrow come Nov. 1 though.
                      I have that IBond calculator. I really dont need to use it though. TD credits the interest in the account to know what I have.

                    3. Thanks, Grid – What the calculator does for me at least in theory is provide a smoothed out actual performance yield that takes into account the compounding effect from Day 1 (actually Month 1) thru to present. So you can see just how important it was to have bot in those 9.63% months…. I suppose it shouldn’t really impact anyone’s decision on what should he do now decision of whether or not to swap out of 0% fixed IBonds for new ones if they hit the 2% fixed range next month, but it does put in black and white the yield, not just the dollar amount increase an IBond purchaser has achieved over time… And hey, it looks like all the “Downloads” shown on the site are all spreadsheet based too… O boy! Zzzzzzzzzzzzzzzz.

                  2. 2WR, If your feeling frisky the Treasury is going to have a 5 year TIPS auction this Thursday. They dont have them nearly as often as the fixed issuances. Present fixed is running about 2.4% for current 5 year variety. You can buy through your brokerage, but through your TD account you can buy as little as a $100 worth. Im tempted to add a bit more to my TIPS. 5 years is as far as I am willing to go out though.

                    1. Thanks, Grid – I did notice them listed on Fidelity’s Friday summary of upcoming Treasury auctions they send to me…. I’ll run the possible choices thru my spreadsheet and let it tell me if I should bid or not………… ha

  9. Well, I got an unpleasant surprise today when I went to Chase to cash in some paper I-Bonds. Chase no longer will handle any I-Bond having a face value over $200. So now I will have to figure out how to convert these to my online Treasury Direct account. Anybody have any other suggestions? Thanks.

    1. I know this is not the best advice but I would find a new bank, open an account if they handle ibonds properly as a bank should do, and slowly move away from Chase. What is the point of using a bank if they don’t care about you and your banking needs?

      Otherwise please see this website:

      https://www.treasurydirect.gov/savings-bonds/cashing-a-bond/

      Scroll down on how to “How do I cash my paper savings bonds?” Form 1522.

      1. I opened a checking account at Wells Fargo and deposited all of my paper I-Bonds. Problem solved. I will probably close the WF account in a few months after I draw the balance to zero. I will stay with Chase because their online system works so well. Also I have numerous direct deposits that come to the Chase accounts. I don’t want to have to change those to WF.

        1. All the big banks are getting hard to deal with.

          I had a contract employee (whom I had known for decades) who couldn’t get the local Chase branch to accept her paycheck (as in refused it as a deposit into her Chase account) because “it might be fraudulent”. I had personally signed the check, so I went to the bank with her and had a discussion with the bank manager. His concern seemed to be that the company was so new. Couldn’t even get him to describe what he would accept as proof that it wasn’t fraudulent. Showed my ID, showed the company articles, showed a company bank statement that showed a hefty balance. I even pointed out that it would be a crime for me to issue a fraudulent check, and he now had me on bank cameras helping their customer deposit the check. Nothing I offered was good enough, and he wouldn’t say what would be. Just crazy. Ended up going to the local credit union where she still had a small account. No problem there.

          By the way tex, watch your mail. The good folks at WF might open other new accounts for you, or even get you a credit card…
          https://en.wikipedia.org/wiki/Wells_Fargo_cross-selling_scandal

    2. If you are not in a big hurry, I would just convert them. It is not difficult. When I’ve done it, it took 2-3 weeks, but that can vary wildly.

      1. I agree with David. I did it maybe 10 years or so ago on previous IBond spike. It was a breeze converting them and I am a Luddite by nature. Just follow the directions.

    3. Paul,
      I had the same problem. I chose to convert all my paper bonds to electronic. The process takes about 90 days. I had 60 plus paper bonds that ive been sending in batches (just in case). I started sending them in July and just sent my last batch last week. It takes about a week from day they are mailed to receive a acknowledgment of receipt. The about 90 days till they appear in your account. Be warned! they lose there serial number. IE C900123123I will turn into IAAAA with no reference of past S/N. I found this a little confusing trying to make sure they are all accounted for and properly valued. You also have to segregate them into ownership on the shipping manifest you will create. IE multiple owners, beneficiaries, etc.
      They do not notify you when they are converted… you have to keep checking.
      How this helps
      Regards,
      George

    4. PS.
      “California woman pleads guilty in $1.6 million counterfeit Series I savings bond scheme. CNBC”
      I thought this is relevant. Maybe one reason why you bank stopped accepting large denominations. Also I’m guessing the bank has to wait 90 days for the money?

  10. Based on today’s CPI-U print of 306.273 for August 2023 and my back of the envelope math, I calculate the variable Ibond Nov 1 2023 interest rate to be 4.48%. Assuming that the fixed rate of 0.90% does not change, the composite Ibond interest rate will be 5.42% November 1st. However, since there was a 0.25% increase in July 2023, the fixed rate should increase to at least 1%. Therefore, my new prediction is the composite interest rate will be 5.52% on November 1st. Not a bad place to park $10K or $20K if you can overlook the the non user friendly Treasury Direct website.

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