https://www.doctorofcre
Code:
https://www.doctorofcredit.com/us-treasury-bonds-rate-set-to-increase-to-7-12-rate-i-bonds/
Comparing Series EE and Series I Savings Bonds
https://www.treasurydir
Code:
https://www.treasurydirect.gov/indiv/research/indepth/ebonds/res_e_bonds_eecomparison.htm
1. This 7.12% rate on I bond is for next six months only (April 2022).
2. If, in April inflation is higher than today, they will earn higher, if inflation is less they will earn less for next six months, so basically rate changes every six months based on inflation.
3. You can keep these for 30 years or withdraw earlier (see #4 below)
4. You need to wait for 1 year before you can withdraw
5. If you withdraw between 1 yr and 5 yr, you lose last 3 months of interest (see #2 above, so if based on inflation if interest it was paying was reduced, you lose reduced interest)
6. After 5 year, no penalty so you don't lose last 3 months of interest
7. No state taxes on distribution (as per my understanding)
8. If you used for certain causes (like education) and your AGI is below certain value, you don't pay Federal tax as well (as per my understanding)
9. Buy at the end of month (on the 30th of a 31-day month, or 29th of a 30-day month), interest starts accruing from the 1st of the same month.
10. Interest rate can go down to 0% but not lower. This happened in 2009 during deflation.
Purchasing for others - https://slickdeals.net/f/15497017-us-treasury-series-i-savings-bonds-inflation-rate-earnings-nov-21-april-22-7-12-interest-limit-10k-year-per-person?p=152307
FAQs Concerning the Change in the Annual Purchase Limit for Savings Bonds [treasurydirect.gov]
Buy I Bonds as a Gift: What Works and What Doesn't [thefinancebuff.com]
Historical bond rate chart:
https://www.treasurydir
Code:
https://www.treasurydirect.gov/indiv/research/indepth/ibonds/IBondRateChart.pdf
May 2021 3.54%
Nov 2020 1.68%
May 2020 1.06%
Nov 2019 2.22%
May 2019 1.9%
Nov 2018 2.83%
One trick to max out these I bonds: Overpay your estimated taxes now, by at least $5000, and then you can apply your refund of up to $5000 to buy $5000 more of I bonds, so it brings your total per year up to $15,000. The $5000 will come as paper I bonds, but you can mail them to the Treasury and convert them into electronic bonds.
Track inflation and iBond here
Update Apr 2022 [wordpress.com]
About this offer:
How do I buy a Series I bond?
Must register or sign-in to your free TreasuryDirect.gov account and link a bank account.
Electronically: Online via TreasuryDirect (including through payroll direct deposit)
Paper: By mail when you file your federal tax return
Click here to view a Guided Tour
What is a Series I bond? (source)
"A savings bond that earns interest based on combining a fixed rate and an inflation rate."
You may use Series I bonds to:
Save in a low-risk product that helps protect your savings from inflation
Supplement your retirement income
Give as a gift
Pay for education
Click here for more information about Series I Bonds
What interest does a Series I bond earn? (source)
A combination of a fixed rate that stays the same for the life of the bond and an inflation rate that is set twice a year.
For bonds issued from November 2021 through April 2022, the combined rate is 7.12%
On May 1, 2022, the rate is scheduled to update, and is expected to be over 9%. Source 1 [cnbc.com] Source 2 [tipswatch.com]
How to buy: After registering and logging in, click on "BuyDirect" on the top menu bar. Check the "Series I" radio button.
This post can be edited by most users to provide up-to-date information about developments of this thread based on user responses, and user findings. Feel free to add, change or remove information shown here as it becomes available. This includes new coupons, rebates, ideas, thread summary, and similar items.
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You can copy/paste password at treasurydirect.gov
Auto method:
1. setup a bookmarklet in Firefox or Chrome by creating a new bookmark and putting the following in the URL section and save:
Code:
javascript:Array.from(document.getElementsByTagName("input")).forEach((el)=>el.removeAttribute("readonly"))
Manual method:
1. Press F12 to show the raw HTML code
2. Click the Picker and click on the read-only password editbox
3. Delete the readonly stuff in code
4. The password box is no longer readonly to you. Now you can enter the password without using virtual keyboard or press the Auto fill button on your password manager and log in
Per @cinderblockfist -- Form 5444 on the Treasury site has been updated (Aug 2022) to allow notary signatures.
This is a good article that provides step-by-step instructions on how to buy Series I bonds from Treasury Direct. "Bonds' Record-High Rates Are Worth the Hassle: How to Purchase Savings Bonds Online":
https://www.cnet.com/personal-fin...ds-online/
Top Comments
Also, it is highly unlikely that inflation is going to go down to 0% anytime soon, so most of us will just leave the money in there for at least 5 years if not longer. Sure beats the 0.5% - 1% savings interest I was getting.
Buy today: 7.12% for next 6 mo + 9.6% for 6 mo after + (unknown)% for next 6 mon
Buy in May: 9.6% for 6 mo after + (unknown)% for next 6 mon + (unknown)% for next 6 mon
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Lets assume that you invest the $10k in April and assume 3 rate changes 7.12% (if you buy in April 2022), 9.23% (May 2022 rate change) and 12% (assume rate goes this high in Nov 2022) and then rate falls to 3% in April 2023. You will hold the bond for 21 months and give the last 3 months of 3% interest as penalty. Earnings will be total $1,539 and if you annualize that earning, in 12 months you will earn $879.15. This will net you an annualized rate of 8.7915%.
Now say you buy the same $10k of i-bonds in May and assume 2 rate changes 9.23% (May 2022 rate) and 12% (assume rate goes this high in Nov 2022) and then rate falls to 3% in April 2023. You will hold the bond for 15 months and give the last 3 months of interest as penalty. Earnings will be total $999 and if you annualize that earning, in 12 months you will earn $799. This will net you an annualized rate of 7.99%.
One can argue that you can also invest the $10799 in the 2nd scenario again for 6 months outside of i-bonds and earn additional interest but since we annualized the interest rate, investing in April netted you a higher % rate for a 12 month holding period.
If you want to look at the calculation, here's a google sheet link - https://docs.google.com/spreadshe...sp=
Lets assume that you invest the $10k in April and assume 3 rate changes 7.12% (if you buy in April 2022), 9.23% (May 2022 rate change) and 12% (assume rate goes this high in Nov 2022) and then rate falls to 3% in April 2023. You will hold the bond for 21 months and give the last 3 months of 3% interest as penalty. Earnings will be total $1,539 and if you annualize that earning, in 12 months you will earn $879.15. This will net you an annualized rate of 8.7915%.
Now say you buy the same $10k of i-bonds in May and assume 2 rate changes 9.23% (May 2022 rate) and 12% (assume rate goes this high in Nov 2022) and then rate falls to 3% in April 2023. You will hold the bond for 15 months and give the last 3 months of interest as penalty. Earnings will be total $999 and if you annualize that earning, in 12 months you will earn $799. This will net you an annualized rate of 7.99%.
One can argue that you can also invest the $10799 in the 2nd scenario again for 6 months outside of i-bonds and earn additional interest but since we annualized the interest rate, investing in April netted you a higher % rate for a 12 month holding period.
If you want to look at the calculation, here's a google sheet link - https://docs.google.com/spreadshe...sp=
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Join The Conversation
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