Author Topic: I-Bonds set to return 7.12% next month (November)  (Read 4434 times)

FLBiker

  • Handlebar Stache
  • *****
  • Posts: 1664
  • Age: 46
  • Location: Canada
    • Chop Wood Carry FIRE
I-Bonds set to return 7.12% next month (November)
« on: October 22, 2021, 09:54:14 AM »
Sorry if this is old news to everyone, but I just put $10K into I-Bonds for my wife and myself.  The current rate is 3.54%, and it's going up to 7.12% next month (for 6 months).  I've never held I-Bonds before, but they're tied to inflation and the rates are set for 6 months at a time.  You can't withdraw for a year, and if you withdraw within the first 5 years you lose 3 months of interest.  I'm basically using them instead of an HISA right now, with an eye towards potentially paying off our house when our mortgage comes due in ~4 years (I'm in Canada, so mortgages are different here).  The money I'm putting into them had been earning 1%.  I'll probably do another $20K (10 each for my wife and I) in January.  You're limited to $10K per person per calendar year.

If, like me, you aren't familiar with these, there's a good article on how to buy them here: https://thefinancebuff.com/how-to-buy-i-bonds.html

Anyone else doing this?

bacchi

  • Walrus Stache
  • *******
  • Posts: 6537
Re: I-Bonds set to return 7.12% next month (November)
« Reply #1 on: October 22, 2021, 10:12:39 AM »
A lot of people are doing it. I also think that buying now is better than buying in November.

https://forum.mrmoneymustache.com/welcome-to-the-forum/series-i-savings-bonds-for-emergency-fund-3-54-interest-rate/


FLBiker

  • Handlebar Stache
  • *****
  • Posts: 1664
  • Age: 46
  • Location: Canada
    • Chop Wood Carry FIRE
Re: I-Bonds set to return 7.12% next month (November)
« Reply #2 on: October 22, 2021, 10:25:37 AM »
A lot of people are doing it. I also think that buying now is better than buying in November.

https://forum.mrmoneymustache.com/welcome-to-the-forum/series-i-savings-bonds-for-emergency-fund-3-54-interest-rate/

Ah, thanks!  Mods, feel free to delete this thread.

Roots&Wings

  • Handlebar Stache
  • *****
  • Posts: 1555
Re: I-Bonds set to return 7.12% next month (November)
« Reply #3 on: October 22, 2021, 11:02:09 AM »
Glad you posted this, I hadn't seen it previously. Thanks for the info!

Gatzbie

  • Stubble
  • **
  • Posts: 106
Re: I-Bonds set to return 7.12% next month (November)
« Reply #4 on: October 22, 2021, 04:45:43 PM »
Glad you posted this, I hadn't seen it previously. Thanks for the info!

Same boat. I'm in a crypto interest account for 8% but I'm thinking I could get my parents into this. It seems more safe & reasonable for them.

MustacheAndaHalf

  • Walrus Stache
  • *******
  • Posts: 5849
Re: I-Bonds set to return 7.12% next month (November)
« Reply #5 on: October 22, 2021, 08:29:33 PM »
Glad you posted this, I hadn't seen it previously. Thanks for the info!
Same boat. I'm in a crypto interest account for 8% but I'm thinking I could get my parents into this. It seems more safe & reasonable for them.
I don't view 0.9% higher interest as worth the risk of crypto losing value.  Even Tether is backed by a company in Hong Kong who hasn't been transparent with their assets.  So from the perspective of risk adjusted return, having 7.12% backed by the full faith and credit of the United States seems like a better option to me.

sisto

  • Handlebar Stache
  • *****
  • Posts: 1061
  • Age: 54
  • Location: Sacramento, CA
Re: I-Bonds set to return 7.12% next month (November)
« Reply #6 on: October 22, 2021, 09:14:27 PM »
Sorry if this is old news to everyone, but I just put $10K into I-Bonds for my wife and myself.  The current rate is 3.54%, and it's going up to 7.12% next month (for 6 months).  I've never held I-Bonds before, but they're tied to inflation and the rates are set for 6 months at a time.  You can't withdraw for a year, and if you withdraw within the first 5 years you lose 3 months of interest.  I'm basically using them instead of an HISA right now, with an eye towards potentially paying off our house when our mortgage comes due in ~4 years (I'm in Canada, so mortgages are different here).  The money I'm putting into them had been earning 1%.  I'll probably do another $20K (10 each for my wife and I) in January.  You're limited to $10K per person per calendar year.

If, like me, you aren't familiar with these, there's a good article on how to buy them here: https://thefinancebuff.com/how-to-buy-i-bonds.html

Anyone else doing this?
You can also buy more if you have a trust.

BicycleB

  • Magnum Stache
  • ******
  • Posts: 4641
  • Location: Land of Lincoln
  • Older than the internet, but not wiser... yet
Re: I-Bonds set to return 7.12% next month (November)
« Reply #7 on: October 23, 2021, 02:14:58 PM »
Sorry if this is old news to everyone, but I just put $10K into I-Bonds for my wife and myself.  The current rate is 3.54%, and it's going up to 7.12% next month (for 6 months).  I've never held I-Bonds before, but they're tied to inflation and the rates are set for 6 months at a time.  You can't withdraw for a year, and if you withdraw within the first 5 years you lose 3 months of interest.  I'm basically using them instead of an HISA right now, with an eye towards potentially paying off our house when our mortgage comes due in ~4 years (I'm in Canada, so mortgages are different here).  The money I'm putting into them had been earning 1%.  I'll probably do another $20K (10 each for my wife and I) in January.  You're limited to $10K per person per calendar year.

If, like me, you aren't familiar with these, there's a good article on how to buy them here: https://thefinancebuff.com/how-to-buy-i-bonds.html

Anyone else doing this?
You can also buy more if you have a trust.

Buy more if you have a trust?

waltworks

  • Walrus Stache
  • *******
  • Posts: 5440
Re: I-Bonds set to return 7.12% next month (November)
« Reply #8 on: October 23, 2021, 03:04:45 PM »
If you have a business, you can also buy through the business (same $10k/year limit).

The forum strikes again, I've moved most of our "high yield" cash into I bonds now.

-W

Debts_of_Despair

  • Pencil Stache
  • ****
  • Posts: 543
  • Location: NY
Re: I-Bonds set to return 7.12% next month (November)
« Reply #9 on: October 23, 2021, 08:06:14 PM »
Any suggestions for a Vanguard fund to get in on this action?

Abe

  • Magnum Stache
  • ******
  • Posts: 2627
Re: I-Bonds set to return 7.12% next month (November)
« Reply #10 on: October 23, 2021, 08:18:30 PM »
Any suggestions for a Vanguard fund to get in on this action?

Can only purchase through the treasurydirect.gov website.

Roots&Wings

  • Handlebar Stache
  • *****
  • Posts: 1555
Re: I-Bonds set to return 7.12% next month (November)
« Reply #11 on: October 24, 2021, 05:22:47 AM »
Sorry if this is old news to everyone, but I just put $10K into I-Bonds for my wife and myself.  The current rate is 3.54%, and it's going up to 7.12% next month (for 6 months).  I've never held I-Bonds before, but they're tied to inflation and the rates are set for 6 months at a time.  You can't withdraw for a year, and if you withdraw within the first 5 years you lose 3 months of interest.  I'm basically using them instead of an HISA right now, with an eye towards potentially paying off our house when our mortgage comes due in ~4 years (I'm in Canada, so mortgages are different here).  The money I'm putting into them had been earning 1%.  I'll probably do another $20K (10 each for my wife and I) in January.  You're limited to $10K per person per calendar year.

If, like me, you aren't familiar with these, there's a good article on how to buy them here: https://thefinancebuff.com/how-to-buy-i-bonds.html

Anyone else doing this?
You can also buy more if you have a trust.

Buy more if you have a trust?

A trust has an additional $10k/yr purchase allowance. Same with a business. Plus another $5k from tax refund. The article the OP linked explains this.

A single person could buy up to $35k/yr: $10k individual + $10k trust + $10k business + $5k tax refund. Married people with a business and trust up to $65k/yr.

I'm planning to overpay estimated taxes this year to do the extra $5k tax refund purchase. Haven't found anything prohibiting this (Bogleheads indicates it's fine:  https://www.bogleheads.org/wiki/I_savings_bonds#Purchasing_with_your_IRS_tax_refund).

The historical composite rates show I've stupidly been losing out for many years: https://www.savingsbonds.gov/indiv/research/indepth/ibonds/res_ibonds_iratesandterms.htm#compositerate   

And thanks @FLBiker, I opened an account and bought the first $10k, fairly easy aside from that surprise keyboard password login. Will need to designate the beneficiary once the purchase goes through next week, that'll be a minor inconvenience since they require beneficiary per bond holding, not for the account as a whole. Other potential "downside" could be tax implications when redeemed; if held the full 30 years, that could be sizable.

JJ-

  • Pencil Stache
  • ****
  • Posts: 829
Re: I-Bonds set to return 7.12% next month (November)
« Reply #12 on: October 24, 2021, 08:06:44 AM »
I was looking at treasury website and it didn't look like businesses could buy these? Is it for 5515 i need to review?

It also said in some cases trusts. Where can I find more documentation on this?

BicycleB

  • Magnum Stache
  • ******
  • Posts: 4641
  • Location: Land of Lincoln
  • Older than the internet, but not wiser... yet
Re: I-Bonds set to return 7.12% next month (November)
« Reply #13 on: October 24, 2021, 04:41:12 PM »
Sorry if this is old news to everyone, but I just put $10K into I-Bonds for my wife and myself.  The current rate is 3.54%, and it's going up to 7.12% next month (for 6 months).  I've never held I-Bonds before, but they're tied to inflation and the rates are set for 6 months at a time.  You can't withdraw for a year, and if you withdraw within the first 5 years you lose 3 months of interest.  I'm basically using them instead of an HISA right now, with an eye towards potentially paying off our house when our mortgage comes due in ~4 years (I'm in Canada, so mortgages are different here).  The money I'm putting into them had been earning 1%.  I'll probably do another $20K (10 each for my wife and I) in January.  You're limited to $10K per person per calendar year.

If, like me, you aren't familiar with these, there's a good article on how to buy them here: https://thefinancebuff.com/how-to-buy-i-bonds.html

Anyone else doing this?
You can also buy more if you have a trust.

Buy more if you have a trust?

A trust has an additional $10k/yr purchase allowance. Same with a business. Plus another $5k from tax refund. The article the OP linked explains this.

A single person could buy up to $35k/yr: $10k individual + $10k trust + $10k business + $5k tax refund. Married people with a business and trust up to $65k/yr.


Wow!

I did finally read the linked article. And the article it linked to. And sent them on to friends who have cash-heavy friends of their own.

Thanks. :)

TeeNixx

  • 5 O'Clock Shadow
  • *
  • Posts: 45
  • Let the last check bounce ;-)
Re: I-Bonds set to return 7.12% next month (November)
« Reply #14 on: October 25, 2021, 10:46:53 PM »
PTF

dividendman

  • Handlebar Stache
  • *****
  • Posts: 1558
Re: I-Bonds set to return 7.12% next month (November)
« Reply #15 on: October 28, 2021, 06:10:33 PM »
Why can't an individual just get EIN for like 10 (or however many) Sole Proprietorships just for investing in iBonds and then invest in as many as the individual wants?

Can't Sole Proprietorships just be investment companies that just hold iBonds?

Posted the same question here:

https://forum.mrmoneymustache.com/entrepreneurship/sole-proprietorship(s)-just-for-buying-more-ibonds/

I couldn't find the answer and am pretty close to trying to open like 10-20 accounts...

BicycleB

  • Magnum Stache
  • ******
  • Posts: 4641
  • Location: Land of Lincoln
  • Older than the internet, but not wiser... yet
Re: I-Bonds set to return 7.12% next month (November)
« Reply #16 on: October 28, 2021, 06:23:35 PM »
Why can't an individual just get EIN for like 10 (or however many) Sole Proprietorships just for investing in iBonds and then invest in as many as the individual wants?

Can't Sole Proprietorships just be investment companies that just hold iBonds?

Posted the same question here:

https://forum.mrmoneymustache.com/entrepreneurship/sole-proprietorship(s)-just-for-buying-more-ibonds/

I couldn't find the answer and am pretty close to trying to open like 10-20 accounts...

@dividendman, not a lawyer here, but sole proprietorships just represent an individual. Unlike a fundamentally separate entity with legal protections such as an LLC or an S Corp, it's just you. Seems very fraudulent to me.

I hope "pretty close to trying" means you'll research more before you open any extra accounts. And, probably, decide not to do this.
« Last Edit: October 28, 2021, 06:25:55 PM by BicycleB »

bacchi

  • Walrus Stache
  • *******
  • Posts: 6537
Re: I-Bonds set to return 7.12% next month (November)
« Reply #17 on: October 28, 2021, 07:04:26 PM »
I'm planning to overpay estimated taxes this year to do the extra $5k tax refund purchase.

If you file in April, you'll have a pretty good guess what the next 6 month rate will be.

PDXTabs

  • Walrus Stache
  • *******
  • Posts: 5158
  • Age: 39
  • Location: Vancouver, WA, USA
Re: I-Bonds set to return 7.12% next month (November)
« Reply #18 on: October 28, 2021, 07:13:07 PM »
Why can't an individual just get EIN for like 10 (or however many) Sole Proprietorships just for investing in iBonds and then invest in as many as the individual wants?

Can't Sole Proprietorships just be investment companies that just hold iBonds?

Posted the same question here:

https://forum.mrmoneymustache.com/entrepreneurship/sole-proprietorship(s)-just-for-buying-more-ibonds/

I couldn't find the answer and am pretty close to trying to open like 10-20 accounts...

@dividendman, not a lawyer here, but sole proprietorships just represent an individual. Unlike a fundamentally separate entity with legal protections such as an LLC or an S Corp, it's just you. Seems very fraudulent to me.

I hope "pretty close to trying" means you'll research more before you open any extra accounts. And, probably, decide not to do this.

I'm not a lawyer either, but I would be surprised if an LLC that is taxed as a sole proprietorship and a sole proprietorship without the LLC liability shield were treated differently in this respect.

Either way I would like to know the answer. Opening LLCs isn't hard or expensive.

dividendman

  • Handlebar Stache
  • *****
  • Posts: 1558
Re: I-Bonds set to return 7.12% next month (November)
« Reply #19 on: October 28, 2021, 08:56:16 PM »
Why can't an individual just get EIN for like 10 (or however many) Sole Proprietorships just for investing in iBonds and then invest in as many as the individual wants?

Can't Sole Proprietorships just be investment companies that just hold iBonds?

Posted the same question here:

https://forum.mrmoneymustache.com/entrepreneurship/sole-proprietorship(s)-just-for-buying-more-ibonds/

I couldn't find the answer and am pretty close to trying to open like 10-20 accounts...

@dividendman, not a lawyer here, but sole proprietorships just represent an individual. Unlike a fundamentally separate entity with legal protections such as an LLC or an S Corp, it's just you. Seems very fraudulent to me.

I hope "pretty close to trying" means you'll research more before you open any extra accounts. And, probably, decide not to do this.

I'm not a lawyer either, but I would be surprised if an LLC that is taxed as a sole proprietorship and a sole proprietorship without the LLC liability shield were treated differently in this respect.

Either way I would like to know the answer. Opening LLCs isn't hard or expensive.

I don't see how it's at all fradulent. I'm running investment holding businesses as a sole proprietorship. I've read up on it some more and there doesn't seem to be any problem with asking for more EINs for as many money-making ventures you have.

The key aspect of the "sole" proprietorship is that it has only one owner - you. The reverse is not true, i.e. while it can't be many (owners) to one (business), it can be 1 to many. i.e. I am the sole owner of multiple businesses.

LLCs also aren't expensive but they are a bit more of a hassle and so I'm looking into the sole proprietorship option. It will be a hassle to keep all the treasurydirect accounts in order but that's a small amount of work for a great rate.

My goal is simply to move my entire bond allocation into iBonds via this mechanism.

dividendman

  • Handlebar Stache
  • *****
  • Posts: 1558
Re: I-Bonds set to return 7.12% next month (November)
« Reply #20 on: October 28, 2021, 09:00:38 PM »
The one wrinkle is that you can only ask for one EIN per day. So to open 20 or so would take about 20 days....

Actually, the more I read, the more I think I don't even need multiple EINs, I just need "entity names" for all of my sole proprietorship businesses, then I can just use my own SSN. Now I'm looking up how to get entity names...
« Last Edit: October 28, 2021, 09:17:37 PM by dividendman »

BicycleB

  • Magnum Stache
  • ******
  • Posts: 4641
  • Location: Land of Lincoln
  • Older than the internet, but not wiser... yet
Re: I-Bonds set to return 7.12% next month (November)
« Reply #21 on: October 28, 2021, 11:24:10 PM »
The one wrinkle is that you can only ask for one EIN per day. So to open 20 or so would take about 20 days....

Actually, the more I read, the more I think I don't even need multiple EINs, I just need "entity names" for all of my sole proprietorship businesses, then I can just use my own SSN. Now I'm looking up how to get entity names...

Are you going to change your name to Interestman?
« Last Edit: October 28, 2021, 11:51:46 PM by BicycleB »

caleb

  • Pencil Stache
  • ****
  • Posts: 869
Re: I-Bonds set to return 7.12% next month (November)
« Reply #22 on: October 29, 2021, 01:41:30 PM »
Jason Zweig gives I-Bonds a mention in the WSJ today.  First time I've seen them in a mainstream publication.

https://www.wsj.com/articles/deflating-your-inflation-investing-fears-11635519805?mod=hp_lead_pos12

Quote
Fortunately, the stock market overall has outpaced moderate rises in the cost of living. From 1927 through 2020, according to Dimensional, U.S. stocks as a whole outperformed inflation by an average of 4.9 percentage points annually in years when rises in the cost of living were above the median. If your stock portfolio is already well diversified, it should be able to keep pace with modestly rising prices.

You can also add TIPS, or Treasury inflation-protected securities. Even though they arenít cheap, they still offer protection against unexpected jumps in consumer prices down the road. So do inflation-protected savings bonds, or I bonds.

What you probably donít need is to inflate your fees and your risk, for real, to protect against inflation that might turn out to be a phantom.

StacheyNotTrashy

  • 5 O'Clock Shadow
  • *
  • Posts: 8
Re: I-Bonds set to return 7.12% next month (November)
« Reply #23 on: November 01, 2021, 03:00:28 PM »
So if I buy in November @7.12% for the first 6 months when do I find out what the rate for the next 6 months will be? April 2022?

dandarc

  • Walrus Stache
  • *******
  • Posts: 5220
  • Age: 40
  • Pronouns: he/him/his
Re: I-Bonds set to return 7.12% next month (November)
« Reply #24 on: November 01, 2021, 03:04:02 PM »
So if I buy in November @7.12% for the first 6 months when do I find out what the rate for the next 6 months will be? April 2022?
Yep. I-Bond rate is set twice per year, in April and October.

Fomerly known as something

  • Handlebar Stache
  • *****
  • Posts: 1457
  • Location: CA
Re: I-Bonds set to return 7.12% next month (November)
« Reply #25 on: November 03, 2021, 11:26:19 PM »
Moving myself back into I bonds, and am getting my conservative mom to move 40k into them between her and my dad by Jan 2022.  First I had to explain that Treasury Direct was the US Treasury department.

mntnmn117

  • 5 O'Clock Shadow
  • *
  • Posts: 91
Re: I-Bonds set to return 7.12% next month (November)
« Reply #26 on: November 04, 2021, 10:22:07 AM »
Opened an account and doing this today. Dang the website is sketchy looking.

dividendman

  • Handlebar Stache
  • *****
  • Posts: 1558
Re: I-Bonds set to return 7.12% next month (November)
« Reply #27 on: November 04, 2021, 12:22:15 PM »
Opened an account and doing this today. Dang the website is sketchy looking.

That's how you know it's an official government site!

dandarc

  • Walrus Stache
  • *******
  • Posts: 5220
  • Age: 40
  • Pronouns: he/him/his
Re: I-Bonds set to return 7.12% next month (November)
« Reply #28 on: November 04, 2021, 02:06:32 PM »
Opened an account and doing this today. Dang the website is sketchy looking.

That's how you know it's an official government site!
Having built web applications for government entities for well over a decade now, I resemble that remark.

geekette

  • Handlebar Stache
  • *****
  • Posts: 2384
Re: I-Bonds set to return 7.12% next month (November)
« Reply #29 on: November 04, 2021, 02:13:55 PM »
I tried to convince my sister to buy some with their cash moldering in the bank.  She said her husband refused to move money out of the bank because he didn't want to lose money.  Not that he isn't losing it to inflation as it is...

Actually it was a very frustrating few days with my sisters, but it sure made me aware why we have a much higher net worth than they do. 

BicycleB

  • Magnum Stache
  • ******
  • Posts: 4641
  • Location: Land of Lincoln
  • Older than the internet, but not wiser... yet
Re: I-Bonds set to return 7.12% next month (November)
« Reply #30 on: November 04, 2021, 03:31:05 PM »
I tried to convince my sister to buy some with their cash moldering in the bank.  She said her husband refused to move money out of the bank because he didn't want to lose money.  Not that he isn't losing it to inflation as it is...

Actually it was a very frustrating few days with my sisters, but it sure made me aware why we have a much higher net worth than they do

Some pieces of knowlege are priceless

habanero

  • Handlebar Stache
  • *****
  • Posts: 1126
Re: I-Bonds set to return 7.12% next month (November)
« Reply #31 on: November 04, 2021, 03:37:52 PM »
Opened an account and doing this today. Dang the website is sketchy looking.

I was very fascinated when I discovered it (Im not American so can't use it though). One was the fact that you could, on a website, actully buy govvies directly from the mothership and the other was the looks of it.

PDXTabs

  • Walrus Stache
  • *******
  • Posts: 5158
  • Age: 39
  • Location: Vancouver, WA, USA
Re: I-Bonds set to return 7.12% next month (November)
« Reply #32 on: November 04, 2021, 03:49:40 PM »
Opened an account and doing this today. Dang the website is sketchy looking.

I was very fascinated when I discovered it (Im not American so can't use it though). One was the fact that you could, on a website, actully buy govvies directly from the mothership and the other was the looks of it.

Just setup a South Dakota trust! That's mostly a joke, but in all seriousness it seems like you should be able to form an LLC in some state somewhere (maybe Nevada) and buy these if you really want to.

stepingum

  • 5 O'Clock Shadow
  • *
  • Posts: 55
Re: I-Bonds set to return 7.12% next month (November)
« Reply #33 on: November 17, 2021, 04:24:33 AM »
I'm trying to find ways around the $10k/ year purchase limit and stumbled on this idea. Thoughts?

I have two minor children that will still be minor children when I will probably need to redeem these (5-10 years). Gifting them I Bonds doesn't seem like a great idea, but I found a thread saying I could make them Co owners instead! If they are listed first, it counts towards their purchase limit. And in 5-10 years I can redeem them legally, as an owner, and pay taxes easily (1099-INT should go to me if the funds a deposited in my account). Genius! Or, too good to be true?

Back story, my husband is very fiscally conservative (like, cash under the mattress), but I think I convinced him why this is safer/better than cash, so I'd like to purchase as much as possible while he's on board with the idea (and get a bunch of cash somewhere where it isn't rotting into nothingness).

JoePublic3.14

  • Bristles
  • ***
  • Posts: 257
Re: I-Bonds set to return 7.12% next month (November)
« Reply #34 on: November 17, 2021, 04:46:58 AM »
Opened an account and doing this today. Dang the website is sketchy looking.

I tried to open an account and got the dreaded Ďcannot verify some of your info' which means I have to fill out a form and get a signature guarantee (step down from a medallion). Ugh. That means I have to find a place to print a page (easy, but annoying) and a banker who will do the guarantee. I have no local bank, and have not been a bank since who knows when. I guess Iíll call a small local bank and see what say.

sonofsven

  • Handlebar Stache
  • *****
  • Posts: 1289
Re: I-Bonds set to return 7.12% next month (November)
« Reply #35 on: November 17, 2021, 04:59:36 AM »
ptf.

px4shooter

  • Stubble
  • **
  • Posts: 140
Re: I-Bonds set to return 7.12% next month (November)
« Reply #36 on: November 17, 2021, 05:50:49 PM »
Is this the highest amount it has been or is there a way to check history?

Just did me and the spouse. Have 4 LLCs we can do too along with kids. Keep getting a weird "site is currently down" error though.

PDXTabs

  • Walrus Stache
  • *******
  • Posts: 5158
  • Age: 39
  • Location: Vancouver, WA, USA
Re: I-Bonds set to return 7.12% next month (November)
« Reply #37 on: November 17, 2021, 06:12:05 PM »
Is this the highest amount it has been or is there a way to check history?

There's this chart: https://www.treasurydirect.gov/indiv/research/indepth/ibonds/ibondratechart.pdf