Lawnboy
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These seem like a no brainer. Wish I would have known about them. Currently my cash is losing money in my sock drawer
Ibonds: 7.1% return
- Thread starter RobG
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npaden
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I just bought one this week too. Looks like I will be buying another for my wife next month.
noharleyyet
Well-known member
7 and change is glorious Marv...Dang I jumped too quick on my I-bonds this last go-around. Just came out that next series will be at like 9.6%, beats the crap out of my 7 and change. Win some/Lose some
Cheesehead
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No need to worry @MarvB - yours will update to the new rate after holding for 6 months. ex, I bought Nov 1 when it upped to 7.1% so if it lands at 9.6% based on CPI my 2nd six month period will be at that higher amount.Dang I jumped too quick on my I-bonds this last go-around. Just came out that next series will be at like 9.6%, beats the crap out of my 7 and change. Win some/Lose some
Brittany Chukarman
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Still a win, Marv. Don't look back.
MarvB
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I thought that only a portion of the I-bonds are variable rate, that is, my 7.12% will likely go up but NOT to the new release level (9.6%) due to the fixed component. Am I wrong there?
npaden
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They reprice every 6 months. So your bond will reprice next October or November based on whatever the inflation rate is then.
The fixed component on these bonds right now is a whopping 0.0%! Basically they are 100% inflation bonds right now.
npaden
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That is my understanding as well.
npaden
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If you buy on May 1st you will get the 9.6% rate. It is all somewhat of a gamble though because no one knows for sure what inflation will be in 6 months when it reprices. Maybe in 6 months inflation is at 10% but at 7 months it drops to 5%, your bond you buy in May will reprice at 5% not 10%. But it seems like it would be a good idea to wait two weeks to get the extra 2.5% interest locked in for 6 months for sure.
Cheesehead
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Cheesehead
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That is correct
Cheesehead
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They reprice on May 1 / Nov 1 based on CPI
The fixed rate right now is meaningless and it’s a pure inflation hedge. 7.1% till May 1 then purportedly 9.6%
Based on when you buy it, you’re stuck for six months for good or ill in terms of rate
You CANNOT pull your money out for a year, and get a 3 month rate hit if you pull out before five (minor issue in my mind if it is an emergency)
It’s a great zero risk vehicle in these times IF you can stomach the one year lock in policy (best to ‘ladder’ into it for a multi year strategy…ie, by year three you’ve got $30k ‘inflation proof’ with $20k available to pull out in an emergency)
Capped at $10k per person electronically with another $5k via the goofy paper option via tax refund (note…if married filing joint it’s capped at $25k combined)
Please Correct me if I’m wrong anyone
The fixed rate right now is meaningless and it’s a pure inflation hedge. 7.1% till May 1 then purportedly 9.6%
Based on when you buy it, you’re stuck for six months for good or ill in terms of rate
You CANNOT pull your money out for a year, and get a 3 month rate hit if you pull out before five (minor issue in my mind if it is an emergency)
It’s a great zero risk vehicle in these times IF you can stomach the one year lock in policy (best to ‘ladder’ into it for a multi year strategy…ie, by year three you’ve got $30k ‘inflation proof’ with $20k available to pull out in an emergency)
Capped at $10k per person electronically with another $5k via the goofy paper option via tax refund (note…if married filing joint it’s capped at $25k combined)
Please Correct me if I’m wrong anyone
npaden
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I think that is all technically correct. The only thing that is a little confusing the individual bonds don't immediately reprice on May 1/Nov 1 when they set the new rates. Each individual bond changes based on the rates that were set but reprices based on the month they were purchased. So if I purchased my bond in April, the interest rate paid on my bond will be 7.1% until October 1st when it will change to 9.6% for the period from October 1st to March 31st. Then it will reprice on April 1, 2023 based on whatever the new rate that is set on November 1, 2022 was.
Here is the chart from Treasury Direct.
When does my bond change rates?
| Issue month of your bond | New rates take effect |
|---|---|
| January | January 1 and July 1 |
| February | February 1 and August 1 |
| March | March 1 and September 1 |
| April | April 1 and October 1 |
| May | May 1 and November 1 |
| June | June 1 and December 1 |
| July | July 1 and January 1 |
| August | August 1 and February 1 |
| September | September 1 and March 1 |
| October | October 1 and April 1 |
| November | November 1 and May 1 |
| December | December 1 and June 1 |
Cheesehead
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That’s right. It’s goofy…but in short I think you’re ‘locked for six months’ based on purchase, so in an escalatory rate environment someone who bought in April / Oct is hosed (ie, buy April 30 you are stuck until October with old rate even though it changed May 1), but conversely they are advantaged if rates start decreasing
On balance it’s a wash if you’re in it for the medium to long haul and I love the program for a $10-50k+ emergency fund that gains way better than a high yield savings account once you get past that first year holding period.
If a person was to do exactly that, I'm trying to come up with a reason why that would be a bad idea. I really can't come up with anything.
MarvB
Well-known member
Sooo last question, I’ve stuck to the $10k me/$10k wife through Treasury Direct in the past. Never wanted to duck around with the additional $5k paper via tax returns before. That being said, are the tax returns the ONLY recourse for the extra $5k or can you do it say through a bank or like an Edward Jones type ?
npaden
Well-known member
During deflation periods there have been times when they earn 0.0%. May 2015 the rate was 0.0% for 6 months, May 2009 the rate was 0.0% for 6 months.
But they are good during high inflation periods to at least hold your value anyway. We really are in a unique financial period where short term interest earnings are under 1% and inflation is approaching 10%. Usually if inflation is high then interest rates are going to be high and they pretty much even out.
Cheesehead
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To your question: yes
To elaborate: you could get up to $30k
Post in thread 'Ibonds: 7.1% return'
https://www.hunttalk.com/threads/ibonds-7-1-return.310021/post-3285208
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