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.

447 thoughts on “I Bonds”

  1. Just thinking here and digesting data taken in this month. The ruminations of the subconscious mind as I take that first coffee.
    Seems that the speculation on the bond yield curve going out two years or so in TIME (projection) and the DURATION (current real world quotes) = 7 years or more are probably over relating on some historical precedents.
    I am thinking that the longer 7+ years may NOT really move that much, in a recession, producing a minor gain effect, as everyone is beginning to pile into and talk about. The decrease of long term rates IS NOT guaranteed, unless there is a real panic and flight. That may not happen, besides who’s going to want them?
    Those longer term rates are the ones that are really needing to ‘normalize’ and I am seeing that the place they are ALREADY at are normal, even for a recession and going into the future with inflation facts.
    I know there will be some kind of gains at the longer end of duration , probably as a matter of comparison to the last dozen cycles where there WAS a lot more space UNDER those long rate. and the activity of well trained robot-behavior (human reflex) and talking heads wanting to sell you their book.
    I think that this time there will be further decreases in the sub-7 year target, OK… to MAYBE produce some minor gains…OR…HOLD until MAT…gotta have coupon to compound.
    Seems those longer term issues could remain flat OR trend up; one had BETTER have great coupons to hold.
    Don’t forget: This time it IS DIFFERENT. The int trend has reversed from many decades of training. It may be a lot more ‘interesting’ from here going forward.
    Respectfully Submitted , JA
    PS: TIPs and iBonds are still a raw deal in my estimation.

    1. Joel, here is a few more thoughts for the java. The Fed has already stated they are fully in “restrictive mode” now. So depending on forward inflation rates, this will determine if it is restrictive enough. The longer end is always more problematic. The typical average 10 year Treasury bond spread to inflation is 2. But its never consistently there so it could overshoot or undershoot based on whatever variables one wants to assume. I have focused more on the short end and juicy live floaters. Timing the transition to long is hopeless. But toe in gradually more I will. Until then sitting on the short end or sidelines actually pays one above CPI yield. So for time being one is not getting smoked playing it extra safe. A refreshing change.

  2. Many are redeeming I-bonds — not that they’re bad — but that they’re just not the great deal that they were. In order to avoid having the 3-month interest penalty hurt too much, you wait until the bond is at least 3 months into the lower interest rate period. This 11-minute video (by Diamond NestEgg) shows computations and examples of when to sell. Her computations matched mine, with one exception, and I suspect she’s right and I’m wrong (by 1 month). https://www.youtube.com/watch?v=cBYD7MdXzG4

  3. Dumb question perhaps, but is there a link on the TreasuryDirect website that shows the actual rate you are earning for the current 6 month period if you own IBonds with 0.00% fixed coupon rate? I’m trying to prepare standing instructions for heirs who might have to figure out what I’ve bot and I just do not see where that info is visible… It’s got to be there somewhere doesn’t it?

      1. Hmmmm, thanks, Grid, I guess…………. I had seen that chart but found it to be illegible so paid it no mind…. Best I can tell, it doesn’t seem to slice out what a 0% fixed IBond would be earning now as the latest number show’s 4.30% I think and that’s what the .90% IBond is earning, right? It”s lower than that, of course, but is it as low as 1.69%…. Bottom line seems to be that there’s no easy link for the uninformed to refer to except for the IBond with the most current fixed income figure, i.e. .90%

        The eyebond site seems to show the same 4.30% only number too..

        1. 2WR, use the “issue date” column and the “May-23” column to find out what your ibond is currently yielding. For instance, for ibonds bought in October 2021, they are currently yielding 3.38%.

          1. Got it, ken…. Thanks….. on my computer, that chart comes out in such small letters that I did not thoroughly examine…. The info is there and I appreciate the handholding….. Now I’ll have to figure out how to write it up succinctly as instructions for the uninitiated… ha.

            1. Here is an idea. Buy an Ipad and tape it to your will. If you open up the chart link with ipad all you have to do is take your thumb and point finger and separate them on the screen and you can blow up the picture as big as you want! If your a cheapo buy the ipad and deduct the cost from inheritances to be received!

              1. Ha! Don’t need no Apple product to do that, Grid. I won’t get dragged into the Apple Universe, thank you very much, but I wouldn’t be surprised to know some of the family are already there.,… That being said, my 6 year old Windows laptop done did it for me once I was incentivized enough to try it…….. Man, that was tiny tiny to start with!! Odds are the heirs will never bother to figure them out anyway – they’ll just cash them out ASAP but I’ll fee;l better I led them to the tool (or two) to learn. I gifted all 5 grandkids IBonds when the bonds were at their cheapest, but I’ll bet none of the grandkiddies have ever even accessed their TreasDirect accounts to this day…

                1. 2WR, if I was bored I would have the programmer work on recreating the Windows program that the Treasury killed. Don’t know if it is possible, but it wold be trivial to store all of the details about your Savings Bond holdings. Question is whether the Treasury site would allow automatic data download or not. The program would probably have to use the individual log in. This would be similar to the off the shelf programs that will download brokerage info into a Win application. . . I’ll add it to the list, but have several other projects in front of it. I know that I miss it, not to mention the accounts we manage for the 95+ folks . . .

            2. 2WR, I don’t know if you’re still working on any aspect of this, but I’ve discovered if you go to “Current Holdings” and then the “Summary”, it gives a nice list of the bonds you hold, the issue date, current interest rate, face amount and current value. I was able to take a screen shot and print it out.

              On another note, I was wondering if there is a way to roll earlier 0% fixed bonds to the current .9% fixed bonds without messing with my annual purchase limits. My earliest purchases are currently only earning 3.38%.

        2. TreasuryDirect quote:
          ” Earn both a fixed rate of interest and a rate based on inflation. The overall rate is reset twice a year.
          Current Rate: 4.30%
          This includes a fixed rate of 0.90%
          For I bonds issued May 1, 2023 to October 31, 2023″
          So part based on inflation is 4.30 – .9 = 3.4% . If Ibond was purchased prior to May 1, 2023 add the fixed rate (might be zero) when originally purchased to the 3.4%.

      2. I completely agree Grid. Continuing to build out a full five-year IBond ladder in a corner of holdings, maxing out annual buying via the self and gift doors. There are certainly better yielders available today, but one never knows what tomorrow will bring.

        Seeing this grouping as a hedge against that unknown. Especially with the fixed rate component in place will continue to accumulate.

        Key points:
        1) AAA-rated
        2) Guaranteed zero loss of principal
        3) Auto-reinvest every six months
        4) Tax-deferred gains (and associated compounding)
        5) State tax-free in withdrawal
        6) Provided they continue, can roll over no-fixed-rate IBonds into fixed-rate-component IBonds at the 5-year maturity, avoiding the 3-month early withdrawal penalty.
        7) In combination with #4, the fixed component ensures a yield that will exceed inflation. So we’re retaining purchasing power, and modestly adding to it. A subtle (or not so subtle) point here is that despite rising nominal rates, real inflation-adjusted gains have been elusive the last few years – and for most, they have been negative – or worse. This holding addresses/hedges that/those exposures head-on.

        For a corner of holdings seeing this opportunity as tomorrow’s “shoulda, coulda, woulda.”

    1. 2WR, unfortunately the US Treasury killed a downloadable Windows program that made it easy to track all of you savings bonds. Not just I’s, but also EE fixed rate ones for example. Told you their current value, current interest rate paid, maturity date, etc. It made it easy to track all of your holdings. You just had to print out a current snapshot and put it in your estate package. Your heirs would know exactly what you owned, be they paper or electronic. And best of all if you only had paper savings bonds, you did not need a Treasury Direct account. Try telling a 97 year old account owner that has owned saving bonds for 70+ years that you have to get an online account to buy more Ibonds. Good luck with that.

      I still use archived printouts to tell owners when they have bonds that are maturing and need to be cashed in.

      1. Oh, sure, Tex – tell me about what the Treasury DOESN’T have anymore…… ha! I guess they figured out it was too valuable a tool so they had to kill it….. I’ll also bet the guy responsible for the death knell has most likely moved on and is now working for FINRA………

  4. Question about interest rates:
    I was going to ask through Treasury Direct, but thought I might get a faster answer here…..
    I’ve made several purchases, but I am confused about my interest rate stated on my bonds.
    Here’s what they are currently showing as effective interest rates”
    4-1-22 6.48%
    10-1-22 6.48%
    12-1-22 3.79%
    12-1-22 3.79%
    3-1-23 6.89%
    4-1-23 6.89%
    The 2 purchased in December (12-21 and 12-28 purchase dates – both purchases scheduled 12-20) are showing something called “purchase schedule” “A”. The remaining 4 show “purchase schedule” “none”. I have no idea what those designations mean. The other difference is that of the 4, the history shows “purchase requested” and then “security issued”. The 2 anomolies say “repeat purchase requested” and then “security issued”.
    I don’t see how those differences should account for being paid at a lesser amount than the other ones since they were purchased in between the other ones. A couple weeks ago when I looked at the account, they were paying at the expected 6.89% along with my March and April ’23 purchases.

    Did I do something wrong when I purchased these, or is this a glitch in the TD system that will get ironed out? Has anyone else experienced this? Bottom line is they are all I-Bonds.

    1. Mark, I don’t know the answer to your question, but I do know that the one time I called TD customer service, the rep was very knowledgeable, and the wait wasn’t very long either. YMMV

      1. Thanks Bur, Not much activity on this page currently. I’ll reach out to TD in the near future and see what’s amiss. If there is anything relevant, I will post a follow up.

      1. Correct…The inflation component was already known. It was just waiting to see what the fixed part was. I went ahead and bagged the 6.8% a few months ago and it included a .4% fixed. The .9% fixed is the highest since Nov. 2007.

      1. This is where you can start to sell these off if you so desire and replace with ones with the fixed of .9% which is permanent for the 30 years if one so desires and can live that long.

      2. Yeah – at 3.4% seems like it should be time to bail on existing holdings once they flip over to that rate for 3 months

        Not interested in more, even with the .9% fixed component as it is likely the inflation rate continues down.

        Can earn more elsewhere. Oh well, it was fun while it lasted

        1. Mav, if ones purpose was just riding the short term blip wave, you have a reasonable assumption. That was my plan when I started the 3.56% cycle almost 2 years ago. But if I can wedge say 50k to 100k with a fixed component especially closer to this .9% cycle, I will keep as an uncorrelated asset to the mix.

          1. Exactly. The beauty is in being inflation-hedged with a plus .9%. Not a grand slam and not all-in, but for a portion of holdings, an inexorable positive total return, a store of value and a state tax-free component.

          2. Grid. Yeah to me it was nice riding the short term wave, but even if I want to keep that portion of funds to no risk assets, I don’t see any real value holding it when I can get better returns in a Treasury Bill or CD – and not have to worry about a 5 year holding period or losing 3 months of interest if cashed in before 5 years

            And Treasury Bills give you state tax free too

            But that’s just me – everyone has different needs and perspectives

  5. If the I bond rate goes to 3.38% or somewhere close would it be correct to assume you would have a penalty of about .85% if you redeem I bonds that you have not owned for 5 years? I took 3.38% divided by 12 and then multiplied by 3 (months) to come up with the approximate .85% penalty.

    Appreciate any information.

    1. JB/AZ You may want to ask at the Governmental information bond line 304-480-5151 what the penalty would be. Please report back to us

    2. You lose the last 3 months interest if you redeem before 5 years. Wait til the rate resets to something you don’t like, wait 3 more months, and then cash it in. You don’t want to lose some of the earlier, better interest rate period.

      1. I think you have to wait for 3 months after YOUR rate changes, and then redeem early in the following month. That’s because if you buy in March, your bond rate is set for 6 months, so you’ll get the older (better) rate until Sept or Oct. Then it will change the “new” rate set in April. Then you wait 3 months, and redeem early in the following month. Did I get that right, or am I completely off-base?

        1. yes, that’s correct. your rate change is based on when you bought the bond during the calendar cycle.

    3. Not sure if this is correct so check me!
      After trying to figure out the answer to the question you asked for my accounts this is what I decided.
      The TD site shows the current value of your investment on the first of the month. Remember that when you bought you got a credit for interest for a whole month even if you bought near the end of the month. So the values shown on the first of the month won’t change for the whole month (the gov ain’t giving any bonus).
      So- I take the current value divided by the initial investment divided by the months held to get my return.
      The TD site also shows your current interest rate which I think reflects the holdback. So you can guesstimate what it will be next month.

  6. FYI – Bloomberg article today saying Golden Age of I-Bond investing is over:

    I Bonds Lose Their Luster With Yield Set to Plunge Below 4%

    The popular savings tools will pay an estimated 3.8% when issued next month, with the interest rate plummeting as inflation cools.

    April 12, 2023 at 8:00 AM PDT

    The golden age of the I bond appears to be over.

    Yields on the popular Series I savings bonds are set to slump after a key measure of inflation showed signs of softening on Wednesday. Just a few months ago, they offered an historic 9.62% rate. Now that figure is expected to fall to 3.8%, putting the return closer to what you can get on certificates of deposit, high-yield savings accounts and money-market funds.

    I Bond Yield Slated To Move Lower

    The savings vehicle is estimated to have a 3.8% rate beginning May 1

    Note: Rate for May 1 is an estimate based on CPI data

    Low-risk, inflation-linked I bonds soared in popularity over the past two years as investors looked for ways to shield their cash from rising prices. In the 15-month stretch beginning in November 2021, when I bond rates rose above 7% for the first time since 2000, sales topped $40 billion, according to the US Treasury Department.

    “From May of 2020 until October of 2022, if someone said, ‘Should I buy an I bond?’ The answer was, ‘Yes,’” said Jeremy Keil, a financial adviser at Keil Financial Partners in New Berlin, Wisconsin. “Today the answer is, ‘Maybe.’”
    Bloomberg News asked financial advisers across the country whether people should consider purchasing I bonds now, later or never. This is what they told us.

    Who Should Buy Now?
    The new yield is primarily tied to the semiannual inflation rate from September to March, which cooled from the previous six-month period, plus a somewhat enigmatic fixed rate that’s determined by the Treasury Department. So while it’s possible to estimate the new I bond rate — under the assumption that the fixed rate won’t change — investors won’t know for sure until it’s announced on May 1.
    Still, anyone seeking certainty on their rates for the next 12 months should consider making an I bond purchase before the end of April.
    That’s because of the nature and timing of I bond rates. They’re made up of two parts: the fixed rate that never changes over the life of the bond and a variable rate set twice a year that rises and falls with the consumer price index. The Treasury Department sets the rate on the first day of May and November each year.
    Because of the twice-yearly resets, the date investors purchase their I bonds can make a big difference to their returns. Bonds purchased before the end of April will provide six months of the prevailing rate of 6.89%. Then, six months from their purchase date, they’ll take on the estimated 3.8% rate for the subsequent six months. But someone who waits until May will take on the 3.8% rate for six months, and then the still-unknown rate, to be set Nov. 1, for the following six months.
    “If you only plan to hold the bonds for one to two years, it may be sensible to go ahead and lock in the 6.89% for six months,” said George Jameson, owner of Capital Wealth Group in Columbia, South Carolina.

    Who Should Wait?
    There is a case to be made for some investors to wait until May to buy I bonds, which have a 30-year maturity. If the Treasury decides to increase the fixed rate, which remains the same for the life of the bonds, it could offset a lower variable rate.

    “My belief is it will go up,” said Shane Sideris, co-founder of Synchronous Wealth Advisors in Santa Barbara, California. “A higher fixed rate is very attractive since it stays with you for the life of the bond.”
    Currently, the fixed rate is 0.4%. It increased in November from 0%, a surprise to many close observers. But over time, the fixed rate for I bonds has fluctuated from zero to as high as 3.6%. And while the Treasury provides its formula for the variable rate, the fixed rate is something of a mystery.
    “There’s all sorts of speculation that it tracks X or Y, but the reality is nobody knows,” said Jennifer Lammer, founder of advisory Diamond NestEgg in New York and host of a YouTube channel that features popular videos about I bonds.

    Lammer’s plan is to hedge: She’ll buy half of her I bonds in April and the other half once the new rate takes effect, just in case the fixed rate rises. US citizens, residents and government employees can purchase up to $10,000 in I bonds per calendar year. (Those who use their federal income tax refunds may purchase an additional $5,000, which would bring the annual limit to $15,000.)

    Who Shouldn’t Buy?
    Investors should get their financial houses in order before investing in I bonds, said Brandon Welch, a financial adviser at Newport Wealth Advisors.
    He points out that a 3.8% yield pales in comparison to the roughly 20% interest rates on credit card debt, which investors should prioritize paying off first. Also, people who put their money in I bonds without maxing out their workplace 401(k)s are missing out on free money if their employers match contributions.
    Jonathan Shenkman, a financial adviser and portfolio manager at Shenkman Wealth Management in Woodbury, New York, said investors should look at I bonds in a wider context.
    “One thing that gets lost in all the buzz around inflation and I bonds is that they are not a path to wealth,” he said, pointing to the limits on how much investors can buy and the likelihood that they’ll underperform stocks as inflation cools. “This big-picture perspective is important when ascertaining whether I bonds are a good fit for your portfolio.”

    1. it looks like the next 6 month rate will be 3.38 percent
      so about half of the last 6 months ending may 1(6.48 percent)

  7. 5 months into next 6 month cycle….
    CPI-U Data and May 2023 Inflation Rate Trend

    September 2022 CPI-U: 296.808
    February 2023 CPI-U: 300.840
    May 2023 Inflation Rate Trend: 3.26%
    *May 2023 Inflation Rate Trend = [(300.840/296.808)^(6/5)-1]*2 = 3.26%
    So if you are tracking if purchased today 6.89% for 6 months and 3.66% (.4% fixed carry over) with one more month to go.

    1. There’s been A strategy floated to possibly split purchase this year between this cycle and the next to possibly hope for an increase on the fixed portion from .40%. What do you think? I’ve yet to do this year’s allocation…

      1. Hey 2WR, I am kind of on rote auto pilot. If next cycle provides another fixed, I will gift buy it. And then peel off a corresponding 0% fixed 10k once it gets off the last 6.4% cycle. I will continue doing this until all the 0% fixed are off the books.
        For your situation, that seems a prudent middle hedge. Of course the minutia is the gamble of them having and what it would be, and loss of the higher 6.8% cycle of course.

    2. Would you double check it?
      the annualizations is confusing the hell out of me, when performed twice to two different components!
      April purchased would it be two annualized inflation components 6.48% + *3.26% and one annual fixed as 0.4%?
      there May 2023 is (6.48%+*3.26%)/2+0.4%=5.27% compounding ignored,
      or (6.48%+*3.26%)/2+0.4%-3.66%/4=4.355% adjusted to 3 months penalty

      1. I can go with your numbers too, IGR. Since I dont buy at first of the month, its not really a 3 month penalty. More like 2 months and 5 days, ha. But being I only have 50k in them, having exact percentages doesnt materially effect actual dollars received in interest.
        I remember buying the first tranche when it was 3.56% no fixed and thought I was getting a great deal. Now that it is likely returning to that level its seems low. Those 6-7-9% cycles spoiled me. Probably just sit on this amount here and rotate out zero fixed with ones with fixed if Treasury continues adding a fixed component. Its nice to have something I never check on or worry about. But if ever sits back to around 0%-1% total for a few cycles like it did several years back, I will sell them eventually again. Unless I dont want to pay the accrued taxes on them, ha.

        1. Grid – What’s the point of “rotating out of zero fixed with ones with fixed” other than to raise cash for other external reasons? If you’ve purchased your 10k allotment for the year, does Treas Direct allow you to sell old ones and replace with new ones in the same year beyond your already purchased 10k just as long as you do not net increase your amounts held above 10k? If they don’t then you’re not really rotating out. You’re solely raising cash and probably forfeiting you 3 months… Also no one ever talks about the effects of compounding… That’s what was so great about starting out with those really high coupons last year…. If you rotate out of those, don’t you lose the power of compounding? These are just open questions that jsut come to mind without doing any research.

          1. 2WR, You can sell anytime. You just cant buy more than 10k without gifting. I think you are over thinking what I am doing. I have reached the amount I want to hold give or take. Rotating out 0% with ones with fixed component increases forward returns.
            Inflation is about to rollover quick. In fact with oil collapsing March CPI could be very low or negative. So be it this coming next or some following one soon, I will start selling 10k anytime I buy 10k, starting on next cycle provided a fixed component is added.

            1. I might as well over think…. Gotta “over” something while under performing………

  8. January CPI reading finally got the next 6 month cycle off the near zero floor mat.
    CPI-U Data and May 2023 Inflation Rate Trend
    September 2022 CPI-U: 296.808
    January 2023 CPI-U: 299.170
    May 2023 Inflation Rate Trend: 2.40%
    *May 2023 Inflation Rate Trend = [(299.17/296.808)^(6/4)-1]*2 = 2.40%
    So if its 0% next 2 months one would be looking at 6.89% first 6 months plus 2.80% on back 6 if bought before end of April.

    1. Now I don’t have to make that calc.. thanks, Grid…. So that would mean a first year annual of 4.845% that doesn’t include the current fixed rate ad-on part?

      1. The current 2.4% doesnt include the fixed. Which one would have obviously if they purchased the 6.89% cycle. BTW, you dont really think I bought and sharpened a pencil and did the computations myself you do, ha.

        1. Super Bowl’s come and went and it’s too early for March Madness or Stanley Cup so I figured you might have had some spare time on your hands.. 😉

      2. 2wr…The calc. of the annual of 4.85% does include the fixed rate ad-on. The 6.89% and 2.8% used in the calc. both have it.

  9. I can’t understand my iBond accrued for my $10k purchase last April.
    Treas-direct shows $356 – which I expected for the 6mo at 7.12%, but nothing for the 9.62% final quarter (?) Is there a lag in posting it, or am I way off somehow? Or- do they post that rate after 6months?
    Also- I see there can be a delay in posting of interest rates, but I can’t find where that would be.

    thanks

    1. If you redeem before 5 years there is a 3 month penalty. That number is deducted from the balance you see on their website but no explanation is given.

      1. Just to add to Martins post. They withhold most current 3 months, plus there is a lag of one month to post the interest. The interest is posted first of the month. So in essence you will have a 4 month lag to see interest showing. So if my finger counting is correct you will see your first 9.62% interest show up after February 1.

    2. Gary… They include the 3 mo. penalty you would incur if it were to be sold before 5 years, so it shows 3 months less than you would expect

  10. If an account has been gifted 10k worth of IBonds in 2023, can the account also buy its annual amount of 10k on its own in 2023 as well?

    1. No, not if the gift has been sent and recieved. That counts as the annual 10k purchase limit. However, you can have that person buy you another 10k and hold them in the gift box until next year though. You can buy an additional 5k via a tax refund though come tax filing.

      1. Thanks… That’s what I suspected but wasn’t sure… It seems as though the days of wanting to back up the years for future gift giving are past for IBonds, so it’s one year at a time type decisions now……… And I’ve discovered a problem with my wife’s account where I inverted 2 numbers on the bank account of record so now I have to deal with the intense hoop jumping I need to do just to correct it.. FS Form 5512 sent back by snail mail only signed “in the presence of an authorized certifying official available at a bank, trust company, or credit union…. Certification by a Notary Public is not acceptable.” That’s not easy when your only banking relationship is with an online bank and who knows if there is such a certifying official in a local yokel country bank around here? Will try to track one down on Monday….. I pay for my sloppy mistake, but I suppose I need to get this done if I’m (officially my wife) ever going to successfully cash in an IBond …

        1. 2WR, Geez I know you retired and have plenty of time on your hands, but this is the way you really like to spend it with paperwork? Ha!
          I know you dont sleep much so here is an IBond article for 2023 you can kill some time with. After reading and mulling over, I suspect I will buy late in April, as 12 months will average out close to 5%. And I wont sell them keeping the fixed. Heck its likely I wont sell any this year as I dont want to pay any more taxes this year.
          https://tipswatch.com/2023/01/03/i-bonds-a-not-so-simple-buying-guide-for-2023/

          1. Ah yes, excess paperwork, red tape, dealing with Govt or insurance – all of my favorite things to do………no wonder I’ve got an appointment with a cornea specialist next month.. Thanks for the article

          2. WIsh I read this before my purchase the other day, I’d waited till April likely and done something in between. Oh well, small percentages either way.

        2. They now allow adding a bank account online – so if you haven’t dealt with this yet, you can probably just add the account with the correct numbers and then delete the bad one.

    2. Interestingly, I have read in the comments at end of this article recently that a few people have bought 10k first AND then received their gifts also in same year. Check out the recent comments at the bottom of the linked article. One person said they talked to a TD rep and they said you could do this. Apparently the key is to buy first then receive the gifts. Or just receive them all and not buy if you have no plans to purchase that year. If this is true, I may buy 10k, and if new fixed is .4 or higher, We may have 10k gifted each and then have all the gifts dumped to our accounts to clean out the gift boxes.
      https://thefinancebuff.com/buy-i-bonds-as-gift.html

  11. Isn’t anyone concerned about the small fixed component and duration of these bonds? If inflation normalizes to 2% longer term, the return isnt attractive for 30yr duration… And I missing something?

    1. Your going to be facing that next cycle. I never meant mine to be life holdings. But I am going to snag the 6.8% with a .4% fixed next spring. Then if April price comes with low adjustment and a fixed over 1% I will gift 10k more, and maybe sell 10k more after the high payment yields roll off…Plus 3 months.

      1. By Spring, you mean anytime before April 30? And as far as the return “not being attractive” if inflation normalizes at 2, if your intention is to have placed at least a small stash somewhere where it’s guaranteed to keep up with inflation, then your investment in IBonds will be a success whether or not inflation is at 2% or 8%. Right now, as we rave that money market funds are finally yielding 4%, even cash stashed there is not keeping up… IBonds are… Plus consider the compounding effect of buying IBonds now at 6.89% if held in a future 2% inflation rate environment. To me, as pointed out previously most likely by Grid, if inflation drops dramatically and you have the financial flexibility to do so, you just wait 3 months after they’re low and then get out if you want to, thus giving up only the last 3 months of newly calculated low interest rate.

        1. Inflation is running pretty low this cycle. If its say a 2 handle and a .4% fixed, I can do better in the CD dept. But, we havent had a period with lower inflation and higher TBills. So if they throw a decent fixed rate bone to counter act the low CPI imbalance, Im in for another 10K. A 2% plus 2% fixed would be great to have as a permanent hold. I could then sell off a 0% fixed one at that time if I wanted to keep same amount in IBonds.

      2. Assuming that the i-bond rates will go significantly lower by May, and cd and mm rates will drop significantly by 2024, isn’t the following the best way to invest in i-bonds in 2023:?

        The idea is to take advantage of current high mm or cd rates from Jan to Apr ’23, and then take advantage of 6 months of 6.8% with a i-bond. That is,
        place your $10k in a close to 4% mm or cd until the end of April, and ONLY then buy the i-bond. This way you get 4 months at ~4%, 6 months at 6.8% and then another 6 months at whatever low % will reset until April 2024 when I could sell.
        If instead, I buy my next i-bond in January 2023, I could sell it by Jan 2024, but then who knows how much I will be able to make from Jan to Apr ’24.

        Isn’t something like this what Grid had in mind when he said he would buy next spring?

        Does this make sense? (Obviously, if the i-bonds, mm and cd rates in 2024 will stay high (unlikely) then the above doesn’t make sense).

      3. Hey Grid……..just a novice question…I bought a 10K Ibond exactally a year ago..yield 6%….if I dont do anything (cash out)..what happens?….TIA

        1. Martin, you will earn a variable rate that changes every six months…adjusted with inflation. Matures in 30 years.

        2. Martin, If my guesstimate is correct you bought into the 7.12% cycle and just be completing the 9.62%. You should be just starting the 6.48% now. If you buy 10k more today you would get 6.88% because they added a 0.40% fixed component that is permenent (30 years) to the inflation component.
          Im thinking about buying 10k more at the 6.88% (Treasury spreadsheet says 6.89%) and then selling off 10k with 0% fixed once CPI runs cold after 3 months. This could possibly happen next cycle. Next cycle IBonds wont beat 1 year Treasury. So it depends on what your purpose is with this money on what to do.

          1. Am I missing something? Selling a 10k Ibond and then replacing it with the Ibond having an extra .40% would be a total gain of $40. Then you also lose 3 months dividend for selling early.

            1. Not a lot really. Except I will hold off selling that 10k until yield drops. Next cycle could be just 2%. Let the bond run 3 months past the 6.48% cycle then dump off losing the 2% ish. I gain that back by simply putting it in a 4.75% 1 year treasury likely. Im willing to keep some skin in the game with IBonds but wont add on that cycle and will use opportunity to get rid of the 0% fixed.
              If following cycle is say 2.5% plus 1% fixed, I will sell 10k more and buy 10k more via gifting.

            2. danzeb, I think the point is the newer ibond has a fixed rate of.40% and past ibonds had a fixed rate of 0%. Long duration the current Ibonds with the .4% will yield more. (Assuming inflation doesn’t increase). Does that make sense? You sell the 0 fixed rate when the variable rate remains lower after 3 months.

          2. This six month cycle may be the last hurrah for I-Bonds unless we get that big inflation spike Michael Burry is talking about. I am starting to see disinflation fires starting to burn in the markets. Would rather lock in a 1-2 yr CD or treasury than risk I-bonds moving back to very low rates.

            Game over for sure once Fed rate goes below 3-3.25% again.

            1. If rates become low then the early withdraw penalty will also be low. Worth it all for this and the last few rates.

          3. I bought my $30K for my family of iBond’s yesterday for the 2023 purchase. Just being tax differed, further diversifying my the income side of my estates assets, currently getting a decent no risk yield and my heirs getting a step up in cost basis someday is worth what Uncle Sam is offering.

              1. James, I went to law school and am not an accountant, but I believe ALL iBonds would step up in the case of a death 💀 I am currently skiing in Colorado (Breckinridge/Vale) this week and my heirs may get their portion of my estate after the poor quality of my transversing on these slopes!

                1. Azure, the grinch says there is no step-up cost basis for I bonds. So stay safe on those slopes! 🙂

                  I’ve confirmed this via several sources (including the Wall Street Journal) but this is from the finance buff:
                  https://thefinancebuff.com/i-bonds-taxes-simple-default.html

                  The Default – After You Die
                  The second owner or the beneficiary on your I Bonds inherits those bonds after you die. They can choose to cash out or continue to hold the bonds.

                  By default, your second owner or beneficiary doesn’t pay any taxes when they continue to hold those I Bonds they inherit from you. I Bonds aren’t eligible for a step-up in basis. They’ll pay federal taxes on the accumulated amount of interest since your original purchase when they cash out or when the bonds mature. It’ll be taxed as ordinary income, not long-term capital gains. The interest income is exempt from state taxes and local taxes. TreasuryDirect will track and calculate the interest and generate the 1099-INT form for the new owner.

                  Optional – Pay Up In the Year of Death
                  After you die, your surviving spouse or whoever files your final year’s tax return can choose to include all the accumulated interest earned through your date of death in the gross income on your final tax return. Then the second owner or the beneficiary will pay tax only on the interest earned going forward.

                  Your surviving spouse or the executor of your estate will need to do the calculation themselves if they choose this option. TreasuryDirect won’t generate any 1099 form unless they cash out your I Bonds.

                  Your second owner or beneficiary needs to keep the documentation to show how much interest was already added to your final tax return for the bonds they inherited. When they cash out the bonds or when the bonds mature, the 1099 form from TreasuryDirect will still show all the interest since your original purchase. They’ll have to remember to back out the interest that was already included on your final tax return. See IRS Publication 559 (page 11).

                  Because it can be many years until they cash out the bonds or when the bonds mature, it’s quite possible they’ll forget and they’ll pay tax again on the whole thing when they have a 1099 form in front of them. I think it’s better to just go with the default and not go out of the way to pay up in the year of your death.

  12. Want to buy that extra $5k of I-Bonds with your tax refund but don’t have that much coming back in your refund? Remember up until 1/15/2023 you can file estimated taxes with which you can increase your potential refund to what ever level you want. Yes, you give the Government free use of that money for a few weeks but if you want that extra 5K this is one way to do it.

    1. I thought you could make estimated tax payments at any time before you file your return. Am I wrong about that?

      1. David, the Federal Q4 estimate is due on January 16th, so you should be able to pay through https://www.eftps.gov/eftps/ or you can mail in a check using a 1040-ES form. I have never had a situation where the government wouldn’t accept my money.

      2. You can send the IRS money any time. However, if you want an estimated payment to count toward your 2022 taxes, it is due on January 16th. After that, it will count toward 2023 taxes.

        1. I don’t think this is correct. I logged into EFTPS today (1/31/23) and there is nothing stopping me from making a 2022 estimated tax payment.

          The only significance of the January 16th date is in avoiding an underpayment penalty for the quarter.

  13. new i bond fixed rate starting today is .4
    so at least a little bump from zero on any future i bond purchases

    1. I cant buy until January, and it will still be in effect. I will see how inflation this cycle plays out before I decide to buy again or unwind a 10k gift instead.

  14. If the new rate will be 6.47% plus a one percent base rate as alluded to by another user, you might come out better if you miss the 9.62% for the first 6 months.

    1. No, you would still not be better off. A 3% higher rate for half a year is an extra 1.5% towards your annual return. A 1% base rate wouldn’t be as good.

      You should have bought them last week, and then after a year, if the fixed rate is better, you sell those and buy the new ones.

      1. xerty…Perhaps, but now we are looking at a 3 month penalty eroding that 1.5%. I guess it depends on the reset rate, hold time etc. If they stay around 6%, 3 months penalty is 1.5%. Perhaps the base rate resets lower. Many possible scenarios. Also, the way I understand it, which could be wrong, is the total rate is the base rate/2 plus the inflation rate for the period, so the total new rate would be 6.97 (?)

  15. So many investors are scrambling to buy I Bonds, which pay a 9.62% interest rate if purchased by Oct. 28, that the Treasury Department said its overwhelmed site might not complete all the orders in time.

    During just the final week of October, the Treasury issued $1.95 billion in I Bonds, more than the total for fiscal year 2021. In just one year, some 3.7 million new accounts were created on the site, more than the 2.4 million for the prior 10 years combined.

    https://www.wsj.com/articles/as-investors-scramble-to-buy-i-bonds-treasurydirect-site-has-outages-11666817951

    1. Hard to feel sorry for them when they have had 6 months to lock it in. I bet there were more than a few who locked themselves out of their own accounts trying to do this also, lol.

    2. I realize its too late for this round, but there is a trick to getting through when treasurydirect is overwhelmed.

      They do maintenance every night (as far as I can tell) at around 8-9pm Pacific time. Site becomes useless. However, they “reboot” the site at around 10-10:30 (Pacific time). If you login then, the site is super responsive.

      I was helping some kids set up accounts, etc. on Oct. 27. Attempts before 8pm took hours, and usually wouldn’t complete (couldn’t get all the way through the process without the system failing). Tried again at 10:30 and things were super fast. Helped set up a new beneficiary and gift box purchase in 20 seconds total.

      Not a terrible for those of us in California – but a little late at night for the east coast crowd.

  16. US Treasury Series I Savings Bonds Inflation Rate Earnings (November ’22 – April ’23) will be 6.47% Annualized for 6 months. Strange considering the 8.2 CPI today 🫤

    1. Azure,
      The I-bonds rate reflects last 6 months´ inflation (times 2), whereas the 8.2 is annual. Not strange as inflation peaked 12 to 6 months ago, and in the last 6, it’s been only 3.2%.

  17. looks like the new rate will be 6.47% starting Nov 1
    if you buy now you get 9.62 for 6 months and then the 6.47 for the remaining 6 months
    So over 8 percent for the year

    Not bad as long as you don’t think about your purchasing power going down with no end in site

    1. I bought in April, received the 7% or so until here in Oct. I’m good now at least until Oct ’23

  18. I had a different experience. My wife and I both made that mistake. I got the notice the next day. I just responded to the e mail they told me what I did wrong and they put the money in the correct spots.

    The party maybe coming to an end. Thinking of buying more before the end of the month delivering the past gifts and not buying in 2023. My guess is I will lock in at least high 7’s low 8’s for the next 12 months. I don’t think buying in 2023 will get you that rate.

    1. Strange… I didn’t respond to the email i got. It looked like an automated form letter. I also notice in my account there are two segments.
      name and SS above a Blue bar (dates,rate , amount,etc.) with 4 bonds listed under it. IAAAA thru IAAAD
      Then lower… another
      name and ss above a Blue bar (dates,rate , amount,etc.) with 5 bonds under IAAAH thru IAAAM
      some have the same purchase date in both segments.
      both segments have bonds not matured. I cant come up with an explanation. IAAAC and IAAAD were the bonds that received an over purchase email notification.
      I agree with your logic on buying more. My last purchase will be redeemable in Jan 2025. Even if the last one is tied up for a year at zero, reality is if that does happen banks are going to be at zero as well.

  19. Good morning…
    I purchased 10K of I bonds for my wife and I in June of 2021. On Jan 1 2022 I purchased anther 10K for each. In May 2022, I learned about gifting of bonds between you and your spouse. While making a gift purchase.. I made a mistake while selecting the giftee and purchased another 10K in my own name by accident. I received notification the next day that i exceeded the 10K limit and that fund would be sent back to the account used to fund the purchase with in 8 – 12 weeks. That was mid May (almost 5 months ago) and the bonds still show in my treasury account. After 3 months had passed from the purchase, they started showing earn interest. Anyone ever had this happen? Thoughts?

    The second mistake I may have made was after purchasing an additional 30K (using the correct giftee’s) for my wife and myself. I delivered all of them to our respective accounts the next week. Recently I’ve read that you can only deliver 10K per year to the giftee and if they( giftee) had already met or exceeded their 10K limit for the year, the transfer would be disallowed (gift would stay in your gift box). This must not be correct, because the bonds were all delivered to our respective account and are all earning interest. Again….Anyone ever had this happen? Thoughts?

    Thank you

    Regards,

    1. They are slow correcting, and you earn interest that you get to keep while you wait for them to do so.

      My daughter made the same mistake you did. She tried to gift another family member but accidentally put them in her own account instead. The way the site is put together they make this error extremely likely to occur. The notice of the error did not come until six months or more later and she was sent back her principle and interest fairly soon after that notice went out.

      It is all catch as catch can. Each person’s experience will be unique, but my guess is they will eventually get around to sending the money where it is supposed to be, and if not, then congratulations!

      1. Thanks for sharing you experience Scott.
        Yes, when I added my wife I assumed everything was still under her name. I didnt realize after adding all her info, selecting gift, they shoot you back to the front page. If you dont select the correct precipitant from the drop down menu you just bought more for your self (default to account owner).
        I also sent in mature paper bonds 5 month ago. I got notification they were received in June. Still no payout.
        You think there just going to kick the gifts back to the senders gift box? eventually? I assumed they would sit in the giftee’s gift box. Not the case in my experience.

    1. That would be significant!

      If you did $10k per family member, and say bot $30k each in gifts to deliver in the coming 3 years, a family of 2 could thus have invested a total of $80k at 9.6% rate. Increasing the limit to 30k, you could triple your investment to $240k! Not peanuts anymore.

      Anybody knows how soon can such Acts pass?
      On time to purchase more 9.6% bonds before Nov?
      If won’t pass in Oct., what about buying more gifts now and hoping the Act passes so you could deliver the gifts at the $30k/year rate?

      1. That would be very dangerous, because if it did not pass you would be winding down those gift amounts for a long, long time when there may be better investments available in the future. You can already lock in a 7-8% rate for the long term on a lot of decent companies right now.

        And I doubt Congress will move quickly with the election coming up. Most of their time will be eaten up grandstanding.

      2. I did not want to be negative but by the time they actually make this happen no one will want ibonds for another two decades is what went through my head.

  20. Recent SA article saying that there is a good chance the new I-bond rate falls to 6% after 10/31/22, from current rate of 9.62%.

    The geniuses at the Fed seem to be the only ones out there who still haven’t realized that inflation has peaked.

    From the article:

    “Additionally, since the last I bond inflation rate adjustment, the CPI has only gained 3.01%. We will know what the inflation rate component for November will be when the September CPI data is released but there is a significant probability that September MoM inflation will be at or near 0.0%. This means that the I bond composite rate could fall from 9.62% to 6% for new issuance after October 31.”

    https://seekingalpha.com/article/4542230-series-i-bonds-last-call

    1. The Treasury sets iBond rate as I read.
      As you say, THAT means that there is some implicit indication that inflation has been whacked down? Pffshaw!
      Those Wizards (including The Balancer: Fiscal Congress of ALL Parties for 40 years) just have NOT been reliable for . Destroy demand or temporary consumption. Who is going to go out and invest in creating more supply in the face of lower demand? It’s a tail-chase, not reliable.
      There are OTHER reasons which I will not try to look behind the curtain and expose. Hint: Ghost of the Cold War, Global Dollar demand, Power and Elections at the Top.
      A computer could do it neutrally and better based on an instantaneous VAT tax, like Visa/Big Bank technology.
      IMHO. I know this is not an opinion page, but that is the Soup de Jour, eat it!

    1. Azure, you will love this. So I read about a guy with a new IBond front loading scheme. Going to have 50k put in his 104 year old ailing great grandmothers account gift box. Planning on her dying soon so he can have it all at once bypassing the annual limit.

          1. Alpha, you are right my friend. I only wish the Treasury would let us buy more then $10K per SS# each year. The future for a hyper-inflationary environment looks like it will go on for sometime. Stay Tuned, Azure

    2. would love to see a 7 handle but the way the economy is slowing, it might be another low total inflation number with the core staying higher for longer
      but even at 6 percent combined with the 9 percent you’re getting right now works out pretty well
      going to wait till the number comes out before i buy anymore for my gift box

  21. I ck’d my I Bond Treas Direct acct- opened it on 4/1/22. Looks like they recently paid some interest, but not enough. It should be at 7.12% annual.
    I’m assuming the payment was for 3 months = 1/4 of a year, even tho they pay the same rate for 6 mo after purchase, so I guess this qtr will be the same, and after that I’ll start on the current 9.62%
    I think I should have gotten $10,000 x .0712 and divide by 4 ( 3mo.) = $178
    The amount paid was $60. WTF? Also- I checked just a couple weeks ago, and there was no payment- seems like they took their time to do it.
    Ideas? — thanks

    1. They don’t credit you for the 3 months interest due to the penalty, until you’ve held for 5 years to avoid that. So the first 3 months you earn nothing, and then the next 3 months you’ll see the first 3 months, etc. And at 5 years, you’ll see a “bonus”.

      1. Xerty-
        But- they made a payment for a 3 mo period- small about 1/3, but something.
        Strange.
        thx

      2. Not true because the interest penalty is the latest 3 months and not the first 3 months. After 9 months you’ve earned the rate on the issue in effect at the time of purchase (currently 9.62%). If you cash in at 9 months your penalty is the interest you would have earned in months 7-9.

        1. Right, it should be the last 3 months. If you are a brand new spankin’ owner, the first 3 months are the last 3 months, which gives the false impression it is the first 3 months. :-).

          1. I wasn’t precise / clear enough in my early comment.

            “Not true because the interest penalty is the latest 3 months and not the first 3 months. After 9 months you’ve earned the rate on the issue in effect at the time of purchase (currently 9.62%). If you cash in at 9 months your penalty is the interest you would have earned in months 7-9.”

            yes, that’s true in terms of what you’re earning, but not what they’re showing on the Treasury Direct site. For the site, you are shown what you’d get if you sold today, which means you lose the last 3 months. Which, if you just bought the bond, means you see yourself earning nothing for the first 3 months.

        2. I should add that this was a hypothetical example. In reality you have a 1 yr min holding period on I Bonds so there is no possibility to cash in at 9 mo. I should have used 1 yr in my example.

    2. This video showed me exactly how to calculate earning on I-Bonds:
      https://www.youtube.com/watch?v=9hfHoSijJEk

      I used it to create the spreadsheet table shown below which is spot on for my purchases made last Dec and April of this year. You might need to separate the column headings, but the most important column is the right-most which is the realized earnings. It matches the $60 you received.

      Account Value Annualized Rate Monthly Interest Earned Cumulative Interest Earned Hypothetical Earned on $25 principal Realized Account Value

      4/1/2022 7.12% $60.00 $60.00 $0.15 $10,000
      5/1/2022 7.12% $56.00 $116.00 $0.29 $10,000
      6/1/2022 7.12% $60.00 $176.00 $0.44 $10,000
      7/1/2022 7.12% $60.00 $236.00 $0.59 $10,000
      8/1/2022 7.12% $60.00 $296.00 $0.74 $10,060
      9/1/2022 7.12% $60.00 $356.00 $0.89 $10,116
      10/1/2022 9.62% $80.00 $80.00 $0.20 $10,176
      11/1/2022 9.62% $84.00 $164.00 $0.41 $10,236
      12/1/2022 9.62% $84.00 $248.00 $0.62 $10,296
      1/1/2023 9.62% $80.00 $328.00 $0.82 $10,356
      2/1/2023 9.62% $84.00 $412.00 $1.03 $10,436
      3/1/2023 9.62% $88.00 $500.00 $1.25 $10,520
      4/1/2023 $0.00 $0.00 $10,604.00

      1. Bruce-
        Thanks- not sure why some months with 31 days – like May, earn less than others (June is more).

    3. Gary for a bit more color, $60 looks right by my math. Treasury has accrued you 4 months (April, May, June, July). But it has withheld May, June, and July as Xerty explained. So all you have received is April’s interest. September 1 you will be credited May’s interest.

      1. Grid & Bruce-
        That makes sense, but I thought I would just get the 2d qtr half of the year- so somehow, they are doing monthly. Confusing since the say it’s semi-annual.
        Oh well- trust Uncle Sam….
        Now – just have to ferret-out how to avoid paying the tax on the 1099s they send until I or my sons redeem them. Looks like I have to report it, not pay it- perhaps by listing as tax-free each year (?)
        Thanks

        1. Gary, In years past, I didnt pay tax until I redeemed them a few years later. They should be tax deferred until you redeem unless you specifically designate to pay the interest yearly.

          1. Grid-
            My point was – I looked at the IRS pub- it’s not clear on how to skip paying when you get a 1099 every year – they tend to want to collect on those.
            I’ll figure it out.
            thx

            1. Gary, if you have always deferred its not a problem. If you start paying yep it is…No 1099 is sent to IRS until cashed.
              Note: You (or the child if a bond is in the child’s name) do not actually receive the interest every year even if you report it that way. The interest that the bond earns is reported on a 1099-INT after the bond is cashed or is reissued to reflect a taxable change in ownership. The 1099-INT will show all the interest the bond has earned over the years. Go to IRS Publication 550, Investment Income and Expenses, for instructions on how to tell the IRS that you already reported some or all of that interest in earlier years.

              Reporting the interest all at once at the end
              Most people defer reporting the interest, putting it off until they are filing a federal income tax return for the year in which they receive what the bond is worth including the interest.
              When electronic I Bonds in a TreasuryDirect account stop earning interest, they are automatically cashed and the interest earned is reported to the IRS.
              You can see the interest on your IRS Form 1099-INT.
              If a financial institution pays the bond, you will receive a paper 1099-INT from that financial institution either soon after you cash your bonds or within the first two months after the end of the year in which you cash your bonds.
              If you cash electronic bonds in your TreasuryDirect account, your 1099-INT will be available early the next year in your account. (Video)

              However….If you pay once….
              Once you start to report the interest every year (for example, for a child in the child’s Social Security Number), you must continue to do so every year after that for all your savings bonds (or, for example, the child’s bonds) and any you acquire (or, the child acquires) in the future.
              Our online Savings Bond Calculator can also help you determine the year-to-date earnings for the calendar year.
              https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_itaxconsider.htm

              1. Grid- thanks again
                This was my first buy for my adult sons, so no history of tax payment–and won’t be doing so. Looks like it will be their ‘problem’ unless I sell when/if rates start going too far south.
                Jan ’23 is not too far off- will have to see what the rate will be then.

                1. Gary, I will have to wait longer to decide on some of my money as I locked in last year on 3.56% cycle and havent even got to 9.6% cycle yet. So even with next two CPI’s at zero, I am guaranteed basically over a 6.5% return for 24 months with that 20k anyways. At that point I will have to decide also. Im assuming by then better opportunites will be elsewhere, one never knows. But that is a next years problem!

    4. Don’t worry about trying to reconcile the TD account value. They update the Redemption Tables in early May and early November, with the redemption values of all bonds eligible for redemption in the next 6 months, and their values. Yours will be listed in the November tables with a value for the first time in April 2023. Then you can track them from month to month, if you must.

    5. $ 10,000 on Feb 14.2022. Got a payment of $ 176 well before the
      6 month mark and nothing since. Also, was puzzled. and, you can not
      withdraw interest.

  22. I just can’t do it. I revisited the entire idea and watched a couple of ABC , paint by the numbers videos again. The amount deposited is at a fixed rate for 30 years and the other part a variable that is good for six months and added to principal amount, OK…..in the current environment the Treasury has set the base rate at ZERO? and added to principal at the guaranteed rate plus HOPE and HONESTY?
    I get the short term CD replacement thing, maybe build up to a years working capital idea to ride out a real debacle? Redeem after 12 months, okay., that’s a flip, not an investment. The gamble is that inflation keeps ripping for a long time. The guarantee of PAYMENT is good, but the base, fixed rate is NOT even at the thirty year bond rate…I MIGHT consider THAT + the inflation reset. That would be honest AND based on real markets.
    Seems five year adjustables are honest, but with a lesser guarantee . It’s an instrument that the market has some sway on setting: the 5 year govt rachet rate; which has proven that it moved up; plus the premium spread. Resets have and are producing increase of gross income for the next five years at a rate on 13-20%. They ARE performing their function.
    The argument and role of Capitalist Corporations that are IG is to be able to increase prices, support their debt, survive the ups and downs and perform over very long terms. Same store sales are not more people buying more goods, it’s the inflationary markups and settlement within the reality of the real world of capitalism and time.
    I had an old time banker tell me when I was a kid trying to get mortgages on rental houses back in the late 80’s (which still demanded 20% down), “…if guys like you and your brother go down in some big trainwreck , we’re all fked anyway .”
    The only real advantage is the guarantee of worthless paper delivery by the Treasury if Armageddon hits

    1. The fixed rate is adjusted every May 1 and Nov 1. I think they should have notched it up last May, but am waiting to see what they do in November. With people buying them hand over fist and creating “gift accounts” and trust accounts out the wazoo, it’s doubtful that they’d increase the fixed rate in response to customer demand. I hope that won’t play a role in the decision.

      As long as the fixed rate is zero, I try to remind people that, even though the variable rate seems high, if you put one dollar in now, you’ll get one dollar back (in purchasing power) in 5 years. Redeem sooner and you lose money. And CPI-U underestimates the real inflation we’re all feeling. I put a little cash in, but not a lot; far less than the amount of cash I’d hold if inflation wasn’t so high.

      1. Bruce, Im assuming zilch and thus wont be surprised, ha. Fixed component has been nil or close to it for well over a decade. They never have disclosed methodology, if there even is. So I havent extended myself out much especially with CDs and short duration notes rising. Wells Fargo (along with other banks) has recently been issuing A rated short duration notes that are step ups and callable each year starting today for example at 4.10% with step up to 5.75% on the 4th year if not redeemed. Other banks have similar terms so I have been adding some there.
        https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_iratesandterms.htm#past

  23. This is a two part question: Somewhere along the line I apparently screwed up the info on my wife’s account and, therefore, I seem unable to complete a transaction for her to gift me an IBond for delivery next year….. In attempting to correct the problem which I believe is bank info generated, the site tells me I have to submit Form FS 5512 E.

    1. How am I supposed to do that when I have an online bank only? It requires signatures from a Certifying Bank Officer signed in his presence. There’s no way to get that done. There’s nobody who even knows me at my online bank.

    2. The implication is that to redeem an IBond, I would have to use this same form… Is that the only way to redeem? Has anyone actually tried to redeem their IBonds? Naturally, it’s not something I want to do now, but if this is what I’m faced with in the future when the day comes to redeem, then I’m done trying to jump thru the necessary hoops to gift IBonds. This also adds to fears of what my heirs might face trying to redeem these some day when I’m not around.

    1. I fumble fingered the bank account number when I set up my account and had a similar problem getting it corrected.

      What I did was e-mail them and ask them if they had a solution compliant with the American with Disabilities Act for correcting this and they allowed me to make a one time change online.

      You could try telling them your situation and asking for an exception since online banking is so common now, and they may likewise allow you to make a change. But they have to comply with the ADA so that is the big gun were you to experience something which kept you housebound.

      Also, I had something else interesting happen. I posted on here early this year that my daughter managed to make two $10k deposits this year into her account when she screwed up the gifting process. Well, they finally caught it and sent the money back, but they sent it back with interest earned. I assume it did not include the first quarter interest but I have not calculated it. So you can be half a year or more down the line before they catch some of these things if you had something similar happen and thought you were out of the woods.

      1. Also, I forgot to add, that you should always be able to redeem by having the funds transferred directly to your bank. It just becomes a problem if you want it to be paid out a different way — at least that is what I remember.

    2. I have no idea how to get a medallion signature from an online bank.

      I have redeemed I-bonds in the past on treasury direct. Amounts were electronically deposited into my bank account.

      1. Same here Private, including linked paper Ibonds, no problem withdrawing. I have heard from others that they got trapped in that Medallion signing thing.

  24. Based on todays CPI-U release, the rate reset on November 1, 2022 would be 6.10% APR if there is no further change for the next two months (Aug and Sep). CPI-U actually went down from 296.311 to 296.276 from June to July 2022.

    1. There was zero increase from June but the CPI was 8.5%. Isn’t that the figure used in the reset calculation?

      1. The 8.5% is a 12 month number, so based on difference from 12 month prior. The index # actually dropped for July.

        IBond is based on 6 month view. March index was 287.504. July ended at 296.276. Difference is 8.772 or 3.05% (double that for the 12 month rate). If inflation index remains unchanged it will be 6.10 rate reset. It could be that the index continues to drop and IBond rate will then be lower.

Leave a Reply

Your email address will not be published. Required fields are marked *