New I-bond rate: 3.54%

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Dieter
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Re: New I-bond rate: 3.54%

Post by Dieter » Thu May 06, 2021 7:16 pm

I'm not in the income bracket where I need to worry about paper iBonds (or even what the max is for electronic!), but, thanks for the info on the later i-Bond rate.

I did put some $ into i-bonds for the first time in a while.
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Re: New I-bond rate: 3.54%

Post by jhogue » Thu May 06, 2021 10:29 pm

Dieter wrote:
Thu May 06, 2021 7:16 pm
I'm not in the income bracket where I need to worry about paper iBonds (or even what the max is for electronic!), but, thanks for the info on the later i-Bond rate.

I did put some $ into i-bonds for the first time in a while.


If you are so rich that you don't personally need your quota of paper I-bonds, IRS form 8888 allows you to name your kids, nieces, nephews, etc., as co-owners of your paper I-bonds. They make great gifts if and when those kids have grown up and have learned to appreciate the value of money.

See details at:
https://www.irs.gov/refunds/now-you-can ... tax-refund
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Re: New I-bond rate: 3.54%

Post by Dieter » Fri May 07, 2021 12:25 am

jhogue wrote:
Thu May 06, 2021 10:29 pm
Dieter wrote:
Thu May 06, 2021 7:16 pm
I'm not in the income bracket where I need to worry about paper iBonds (or even what the max is for electronic!), but, thanks for the info on the later i-Bond rate.

I did put some $ into i-bonds for the first time in a while.


If you are so rich that you don't personally need your quota of paper I-bonds, IRS form 8888 allows you to name your kids, nieces, nephews, etc., as co-owners of your paper I-bonds. They make great gifts if and when those kids have grown up and have learned to appreciate the value of money.

See details at:
https://www.irs.gov/refunds/now-you-can ... tax-refund
Sorry that my attempt at humor sounds like I'm rich -- I can't afford to get even close to max my electronic i-Bonds, so I don't worry about extra efforts to do the paper i-Bonds.
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Re: New I-bond rate: 3.54%

Post by jhogue » Fri May 07, 2021 9:01 am

@ Dieter:
Buy what you can. You won't regret it.

If you aren't happy with an I-bond you buy right now, you can always treat it like a 1-year CD and sell it at the end of the one year lock-up period.
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Re: New I-bond rate: 3.54%

Post by Dieter » Fri May 07, 2021 1:42 pm

jhogue wrote:
Fri May 07, 2021 9:01 am
@ Dieter:
Buy what you can. You won't regret it.

If you aren't happy with an I-bond you buy right now, you can always treat it like a 1-year CD and sell it at the end of the one year lock-up period.
Yup, U did buy some. I plan to buy some every six months
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Re: New I-bond rate: 3.54%

Post by vnatale » Sun May 09, 2021 11:50 am

vnatale wrote:
Wed May 05, 2021 12:36 pm

jhogue wrote:
Wed May 05, 2021 12:29 pm

@ Vinny:

1. I-bonds that you buy in your Treasury Direct account after 1 May 2021 will yield 3.54% for the next 6 months.

2. In addition to the above, your can buy $5,000 in I-bonds with your 2020 tax refund. They will also yield 3.54% for the next 6 months. IRS form 8888 has purchase instructions. I bought mine when I e-filed with Turbotax two days ago and encountered no difficulties in filing or alloting my refund. The file/refund page on Turbotax said I should receive my refund in approx. 21 days.


Thanks to your prodding I will make the $10,000 purchase in the next day or two.

I use H8R Block's tax software product. Anyone else use it successfully to make the $5,000 investment? I seem to remember having no issue filling out the Form 8888 but then there was nowhere on the 1040 that showed my $5,000 refund being diverted for the purchase? Just going by memory. I'll report later when I am actually doing it for 2020.


Two things:

1) Unending thanks to jhogue for constantly keeping us updated and his exhortations to buy them.

2) The above is a prime example of the increased chances of meeting a goal once you make it public. After I reached Friday and I'd still not bought them (a day past "the next day or two") buying them was now top-of-mind. Finally did it yesterday! It was an even easier and quicker process than when I purchased my first $10,000 last December. This time all was set up and I just needed to purchase.

Capture.JPG
Capture.JPG (51.95 KiB) Viewed 1105 times
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats."
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Re: New I-bond rate: 3.54%

Post by Dieter » Sun May 09, 2021 12:37 pm

Great!
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Re: New I-bond rate: 3.54%

Post by vnatale » Mon May 10, 2021 9:42 am

vnatale wrote:
Wed May 05, 2021 1:31 pm

jhogue wrote:
Wed May 05, 2021 12:49 pm

@ Vinny:

Sorry, I have never tried H&R Block software.


Turbotax shows Balance/Refund on the front page of its instructions and in the IRS Form 1040.

See IRS Form 1040-SR (2020) page 3:
-Refund Line 34: If line 33 is more than line 24, subtract line 24 from line 33. This is the
amount you overpaid
-Line 35a: Amount of line 34 you want refunded to you. IF Form 8888 is attached, check here...


Again you prodded me to do what I should be doing.

I just went back to my 2019 return:

Capture.JPG

That led me to finally discovered what must have been the problem. Operator error!

While I DID have a From 8888 attached, I DID NOT "check here"!

Thanks again for prodding to look at this now. Hopefully, that will be the last time in my life that I make that particular mistake.


Reading through the IRS instructions...led me to here:

https://www.treasurydirect.gov/indiv/re ... d_1208.htm

Using Your Tax Refund for TreasuryDirect
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats."
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Re: New I-bond rate: 3.54%

Post by vnatale » Mon May 10, 2021 11:29 am

Hopefully jhogue sees this in a timely manner to offer me his esteemed advice.

Although this is my second tax return attempt to buy $5,000 via my tax return....since the first time was a failure and I've yet to have a successful attempt it feels like I am still in my rookie year of attempting to do so.

Hopefully you can help me reconcile the Treasury Direct instructions with what I see on the H&R Block Form 8888.

1) Treasury Direct

Capture.JPG
Capture.JPG (61.73 KiB) Viewed 1039 times


2) Form 8888

1Capture.JPG
1Capture.JPG (146.03 KiB) Viewed 1039 times


Initially I was confused but now in the process of explaining this I think I may now know the correct way forward. But it would be great if you could confirm.

I was initially reading the Treasury Direct instructions that I send the refund via direct deposit to Treasury Direct so that it would be there to purchase the iBonds. I filled out the 8888 the same way with $5,000 in both Part I Direct Deposit AND Part II U.S. Series Savings Bond Purchases. That led to line 8 being an incorrect $10,000.

Now I think I realize that the direct deposit is merely a way to get an amount of your refund into your Treasury Direct account as a way of buying securities like I did the $10,000 on Saturday. Therefore I should have nothing in the Part I section. Just fill out Part II ONLY and remember to check off the box on the 1040 that the 8888 is attached.

I think I have it all correct (Finally!) but you ARE my iBond expert in all ways!

Thanks!
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats."
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Re: New I-bond rate: 3.54%

Post by jhogue » Mon May 10, 2021 11:58 am

@ Vinny,

I think you have it correct. I use Turbotax to complete my tax return. Turbotax software fills out the forms for me. My IRS Form 8888 that I submitted this tax year has nothing in any of the blocks in Part I (Direct Deposit). Part II (U.S. Series I Savings Bond Purchases), is filled out as indicated.

P.S.
I am not an expert in taxes by any means. Aren't you an accountant?
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Re: New I-bond rate: 3.54%

Post by vnatale » Mon May 10, 2021 2:12 pm

jhogue wrote:
Mon May 10, 2021 11:58 am

@ Vinny,

I think you have it correct. I use Turbotax to complete my tax return. Turbotax software fills out the forms for me. My IRS Form 8888 that I submitted this tax year has nothing in any of the blocks in Part I (Direct Deposit). Part II (U.S. Series I Savings Bond Purchases), is filled out as indicated.

P.S.
I am not an expert in taxes by any means. Aren't you an accountant?


Yes. I am an accountant. But as I've explained a few times here...not the type of accountant that people think of when they think of an accountant. Someone who is every year absolutely drowning in tax returns. Except for a small period of time wherein I did work for a CPA firm, I have primarily been the chief financial / accounting person for organizations - doing the organization's tax returns and my own and a few on the side. Currently, I'm really only involved in preparing my own individual return.

When I did work for the CPA firm, I mostly did entity (corporate, partnership) returns and not that many individual returns. And, I never did an individual return that had anything to do with purchasing iBonds using part of the refund. Therefore, I know as much about doing it on a tax return as anyone who is not an accountant. Prior to your excellent exhortations to buy iBonds I'd had zero experience with them both on a personal and professional.

Once at the CPA firm one of the partners told me I was an "expert" in something. I protested, saying I'd only done it once. He said, "That makes you an expert!" By that definition you are far more expert at all things iBonds than me!

But thanks for giving me as much affirmation as you believe you are able to do.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats."
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Re: New I-bond rate: 3.54%

Post by jhogue » Wed May 12, 2021 3:49 pm

Vinny,
Thanks for sharing your experiences as an accountant. I obviously was wrong in assuming that all accountants knew how to do tax returns.

I used to do my own taxes with a pencil and paper and a very large eraser. A few years ago I shifted over to Turbotax as my tax return got longer and more complicated. Turbotax conveniently keeps my tax information from year to year and automatically imports information from my brokerage account, etc.

As for my so-called "expertise" on savings bonds, it comes mostly from my own 30 years experience in buying them. In fact, members of my family bought them as far back as World War II when they were sold as War Bonds.
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Re: New I-bond rate: 3.54%

Post by vnatale » Wed May 12, 2021 8:01 pm

jhogue wrote:
Wed May 12, 2021 3:49 pm

Vinny,
Thanks for sharing your experiences as an accountant. I obviously was wrong in assuming that all accountants knew how to do tax returns.

I used to do my own taxes with a pencil and paper and a very large eraser. A few years ago I shifted over to Turbotax as my tax return got longer and more complicated. Turbotax conveniently keeps my tax information from year to year and automatically imports information from my brokerage account, etc.

As for my so-called "expertise" on savings bonds, it comes mostly from my own 30 years experience in buying them. In fact, members of my family bought them as far back as World War II when they were sold as War Bonds.


I definitely know how to do tax returns. Or, at least my own. But when something new comes up..like in this case...properly filing to effect the $5,000 savings bond purchase...I have no more experience or knowledge doing it than you..actually less since you've been doing it for awhile now.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats."
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Re: New I-bond rate: 3.54%

Post by vnatale » Thu May 13, 2021 11:21 am

jhogue wrote:
Wed May 12, 2021 3:49 pm

Vinny,
Thanks for sharing your experiences as an accountant. I obviously was wrong in assuming that all accountants knew how to do tax returns.

I used to do my own taxes with a pencil and paper and a very large eraser. A few years ago I shifted over to Turbotax as my tax return got longer and more complicated. Turbotax conveniently keeps my tax information from year to year and automatically imports information from my brokerage account, etc.

As for my so-called "expertise" on savings bonds, it comes mostly from my own 30 years experience in buying them. In fact, members of my family bought them as far back as World War II when they were sold as War Bonds.


Tell me if this would surprise you as it did for me given your perception of what an accountant can (and cannot) do.

Several years ago I was having breakfast with an accountant.

I was eagerly looking forward to how he did his investments.

I was shocked when he told me he turned it all over to someone and was completely uninvolved.

I've always thought that since as an accountant you are constantly dealing with money items you'd then therefore certainly be taking care of your own investments.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats."
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Re: New I-bond rate: 3.54%

Post by Kriegsspiel » Fri May 21, 2021 5:20 am

The Anti-Bitcoin Asset You Likely Forgot About, Bloomberg singing the praises of I-Bonds.
"You haven't, I suppose, ever mixed with politicians at close quarters. They're awful. I think some of these must have been the dregs anyhow, but I've discovered, what previously I didn't believe possible, that politicians behave in private life and say exactly the same things as they do in public. Their stupidity is inhuman.
- John Maynard Keynes
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Re: New I-bond rate: 3.54%

Post by jhogue » Sat May 29, 2021 11:04 am

The Wall Street Journal's Jason Zweig has a nice write up on I-bonds in today's Weekend Investor section of the newspaper. He emphasizes that the current yield is many multiples of banks' savings accounts.

He also points out that since I-bonds have no expense ratio or commission there is no incentive for financial advisors to recommend them for their clients. I would also point out that the US Treasury cut out the entire advertising budget for the program a number of years ago.

Zweig's closing thought: "I'm buying I bonds, and so should you."
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Re: New I-bond rate: 3.54%

Post by Dieter » Sat May 29, 2021 4:05 pm

jhogue wrote:
Sat May 29, 2021 11:04 am
The Wall Street Journal's Jason Zweig has a nice write up on I-bonds in today's Weekend Investor section of the newspaper. He emphasizes that the current yield is many multiples of banks' savings accounts.

He also points out that since I-bonds have no expense ratio or commission there is no incentive for financial advisors to recommend them for their clients. I would also point out that the US Treasury cut out the entire advertising budget for the program a number of years ago.

Zweig's closing thought: "I'm buying I bonds, and so should you."
Thanks for mentioning. I think it's the article at https://www.wsj.com/articles/i-bonds-th ... 1622213324

(I was just able to close the dialog about subscribing)
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Re: New I-bond rate: 3.54%

Post by tomfoolery » Fri Jun 11, 2021 7:24 pm

New IBond Real Rate: -1.5%
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Re: New I-bond rate: 3.54%

Post by jhogue » Sat Jun 12, 2021 10:55 am

tomfoolery wrote:
Fri Jun 11, 2021 7:24 pm
New IBond Real Rate: -1.5%
Based on the CPI-U, the real rate of return for I bonds never falls below 0%.

See the TreasuryDirect website for further explanation of the fixed and variable components and how they are reset semi-annually.
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Re: New I-bond rate: 3.54%

Post by tomfoolery » Sat Jun 12, 2021 11:29 am

jhogue wrote:
Sat Jun 12, 2021 10:55 am
tomfoolery wrote:
Fri Jun 11, 2021 7:24 pm
New IBond Real Rate: -1.5%
Based on the CPI-U, the real rate of return for I bonds never falls below 0%.

See the TreasuryDirect website for further explanation of the fixed and variable components and how they are reset semi-annually.
I thought it adjusted every 6 months based on the prior 6 months. So maybe during the next adjustment period, it would hit 6% return. But if you don’t hold for that next 6 month period and cash out before then, it doesn’t matter what it adjusts to for the following 6 months. And eventually you’ll be cashing these out, by force at the 20 year point.

So anyone with a bond maturing or who will cash our before the next adjustment is getting -1.5% real return right now.
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Re: New I-bond rate: 3.54%

Post by jhogue » Sat Jun 12, 2021 11:36 am

Nope. You are wrong on multiple points.

You really should read the TreasuryDirect website before you post on this subject again.
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Re: New I-bond rate: 3.54%

Post by pugchief » Sat Jun 12, 2021 11:44 am

How is the CPI-U relevant to inflation these days anyway?
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Re: New I-bond rate: 3.54%

Post by jhogue » Sun Jun 13, 2021 7:49 am

pugchief wrote:
Sat Jun 12, 2021 11:44 am
How is the CPI-U relevant to inflation these days anyway?
Good question!

To paraphrase Winston Churchill, I think CPI-U is the worst possible inflation index—except for all others. CPI-U has serious shortcomings, but what would be a better replacement?

For more on the subject, see the interesting lead article in this weekend’s Wall Street Journal, entitled “When Americans Took to The Streets Over Inflation.” I think it is a reminder of just how menacing inflation can be to our financial health.
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Re: New I-bond rate: 3.54%

Post by vnatale » Sun Jun 13, 2021 10:45 am

So now it's been a month since I paper filed my tax return with directing $5,000 to be used to purchase paper iBonds.

Unlike last year I have not received a $5,000 refund check.

However, I've not received anything stating that the iBonds have been purchased.

What is the usual timeframe for submitting tax return and getting confirmation that the iBonds have been purchased?
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats."
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Re: New I-bond rate: 3.54%

Post by jhogue » Sun Jun 13, 2021 12:23 pm

Vinny,
I e-filed my 1040 on 3 May. I have not yet received my paper I-bonds.

There are a lot of complaints on several threads over on bogleheads on the IRS lateness of returns. You may recall that the agency had similar problems attributable to lockdowns over the virus last year. The agency had to pay me 5% p.a. for processing my form. If they repeat that performance, they will have to pay me again. Are you not okay with 5% for a return on your money?
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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