New I-Bond Rate for 5/1/23 to 10/31/23

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barrett
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New I-Bond Rate for 5/1/23 to 10/31/23

Post by barrett »

It's now official that the new fixed rate for I-Bonds purchased between 5/1/23 and 10/31/23 is .9%. And the composite rate is 4.3%. Here is the Treasury Direct page:

https://www.treasurydirect.gov/savings-bonds/i-bonds/

I don't think I will be a buyer during this cycle but it sure is good to see a better fixed rate finally.
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Re: New I-Bond Rate for 5/1/23 to 10/31/23

Post by sophie »

Thanks Barrett! That is a good rate to grab if you can!

Hope that rate will remain the same in November....my next buying opportunity is January 2024.
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Re: New I-Bond Rate for 5/1/23 to 10/31/23

Post by Dieter »

I’m not planning to buy new, but I may “swap” (sell and buy new) older iBonds, as most of mine have a 0% fixed rate (one has 0.2% I think)

Not that I have much, but, as I have space, I might as well get that extra 0.9% (even with any tax implications of selling existing iBonds, I _think_ worth it)
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Re: New I-Bond Rate for 5/1/23 to 10/31/23

Post by barrett »

Dieter wrote: Wed May 03, 2023 1:45 pm I’m not planning to buy new, but I may “swap” (sell and buy new) older iBonds, as most of mine have a 0% fixed rate (one has 0.2% I think)

Not that I have much, but, as I have space, I might as well get that extra 0.9% (even with any tax implications of selling existing iBonds, I _think_ worth it)
There have been calculations posted on Bogleheads about how long it takes for this strategy to pay off. It's a few years but I don't recollect more than that. But maybe worth searching for there. Now that I think about it a bit more, the calculations I saw were for the recent .4% fixed rate, but you can probably find them for the new .9% rate as well.
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Re: New I-Bond Rate for 5/1/23 to 10/31/23

Post by Dieter »

Barret, Hal posted the following link in a different thread, that has some timeframes, compared to existing rate of 0.4%

https://tipswatch.com/2023/04/14/i-bond ... uy-at-all/

So, less than three years for mine that have less than 0.4% fixed rate
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Re: New I-Bond Rate for 5/1/23 to 10/31/23

Post by barrett »

Dieter wrote: Wed May 03, 2023 6:01 pm Barret, Hal posted the following link in a different thread, that has some timeframes, compared to existing rate of 0.4%

https://tipswatch.com/2023/04/14/i-bond ... uy-at-all/

So, less than three years for mine that have less than 0.4% fixed rate
Ah, good, so you know what I'm talking about and have already factored that into your thinking. Am I correct then that I-Bonds are a long-term investment for you Dieter?

My wife and I both purchased some 0.0% fixed-rate I-Bonds between May of 2021 and May of 2022 that have now started getting the new 3.38% rate. We may wait three months and start swapping those for higher fixed-rate bonds. Or maybe just hold onto what we have and buy more using the gift box strategy (we already "gifted" some to each other in January of this year).

The only thing I can be sure of at this point is that I will obsess about any decision I make! O0

In his latest Tipswatch article, David Enna notes that on May 7th Treasury Direct will finally make a change to its clunky keyboard, so hopefully that aspect of the user experience will be improved.
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Re: New I-Bond Rate for 5/1/23 to 10/31/23

Post by yankees60 »

Had intended to full go through this when it came out in September 2022 so as to implement.

https://tipswatch.com/2022/09/21/short- ... ctive-now/

However, since then several other things took priority. Those things have now been taken care of and I do have to time to go through it and implement what it recommends.

Still a good strategy?
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: New I-Bond Rate for 5/1/23 to 10/31/23

Post by yankees60 »

Finally went through the article plus the excellent video at the end. Will be watching more of the woman's videos, contacting Vanguard for how to implement using them.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: New I-Bond Rate for 5/1/23 to 10/31/23

Post by Xan »

barrett wrote: Thu May 04, 2023 4:44 amIn his latest Tipswatch article, David Enna notes that on May 7th Treasury Direct will finally make a change to its clunky keyboard, so hopefully that aspect of the user experience will be improved.
The keyboard is clunky. It does its job of preventing the site from being vulnerable to keyloggers. But it certainly is from a time before password managers.

The strangest thing about it is that it's case-insensitive. That is a pretty big loss for the security of passwords, and there wasn't a clear reason for it. The "keyboard" could just as easily have a shift key. The problem it makes now is how do they transition?

Options:
* Continue to be case-insensitive, even with a "normal" password field
* Assume that all letters in people's passwords are meant to be lower-case (or upper-case)

I'm really not seeing any other options, and neither of those options is very good.
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Re: New I-Bond Rate for 5/1/23 to 10/31/23

Post by yankees60 »

Looking at Vanguard's VUSXX
Vanguard Treasury Money Market Fund

I see this:

Performance
YTD returns

1.52%
as of 05/03/2023

Compound yield

4.74%
as of 05/03/2023

Product summary
Vanguard Treasury Money Market Fund, which invests primarily in U.S. Treasury securities, seeks to provide current income and preserve shareholders’ principal investment by maintaining a share price of $1. This fund at a minimum invests 80% of the assets in debt issued directly by the government in the form of Treasury bills and in repurchase agreements fully collateralized by U.S. Treasury securities. As a government money market fund, this fund is required to invest at least 99.5% of its total assets in cash, U.S. government securities, and/or repurchase agreements that are collateralized solely by U.S. government securities or cash (collectively, government securities). As such it is considered one of the most conservative investment options offered by Vanguard. Although the fund invests primarily in short-term U.S. Treasury bills, the amount of income that a shareholder may receive will be largely dependent on the current interest rate environment. Investors who have short-term savings goals and want the added security of investing in a fund in which the majority of the underlying securities are backed by the full faith and credit of the U.S. government may wish to consider this option.

Important Note: Income generated from investments in repurchase agreements with the federal reserve are generally subject to state and local income taxes.

A. I, along, with many other here have no interest in investing in any repurchase agreements. I desire pure 100% Treasury Bill investment.

B. Until now I did not know what is disclosed in the Important Note. When I just filed my taxes for this year I know that I put down (for Massachusetts state tax purposes) that all the income from the fund was from 100% U. S. securities. I cannot remember whether or not I confirmed that with what Vanguard issues in this regard for each of its funds.

I'm now more motivated to finally get out of this fund and own the individual Treasury Bills and build ladders.

I'm currently in the middle of a 30 to 40 minute hold to talk to someone at Vanguard.

I also am invested in this fund 9 different ways. One is non-retirement. The other are 8 in retirement accounts and it is that way as the accounts get taxed in different ways and commingling them can lead to tax issues I definitely want to avoid.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: New I-Bond Rate for 5/1/23 to 10/31/23

Post by yankees60 »

Here are the woman's videos (one of her video's was referred to at the end of the article):

https://www.youtube.com/channel/UCnexoc ... subscriber

Seems to be a lot here worth viewing.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: New I-Bond Rate for 5/1/23 to 10/31/23

Post by yankees60 »

My notes from the Vanguard phone call.

1) Auctions are held with this frequency for the following length T-Bills:

Once a week - one month, two months, three months, four months, six months

Once a month - one year, two years, three year, five years, seven years, ten years

Once a quarter - 20 years, 30 years

2) Vanguard starts taking orders at noon on Tuesdays and take them up until 9:30 AM the day of the auction (Thursdays). Can go to 10:00 AM if it is via phone call rather than online.

3) No charges for buying / selling T-Bills. I asked how Vanguard makes money on this but all I got was the response is that there are no charges.

4) I asked if you could beat the 0.09% expense ratio by doing it yourself. If your prices at auction would presumably be significantly worst than what Vanguard gets when purchasing for its Treasury Money Money Fund (VUSXX). The $ limit at auction is $10 million so that is too small for Vanguard to participate in, which means they purchase them elsewhere. But he said that they probably only get a rate about 0.01% to 0.02% better than we'd get at auction. Therefore worth doing.

5) An example of dates. If I'd been participating at today's auction ... the auction goes off late in the morning (today being the 4th). The trade settles on the 9th. Would own it today and lock in yield today with tomorrow earning the first day's interest.

It would mature on June 6th. It gets swept back on that evening and would have access to the money the following day, June 7th.

Looks like they mature on the closest Tuesday to the bond's maturity date.

But, all in all, the dates did not quite make complete sense and he could not fully explain it to me.

6) Though Vanguard does not provide automatic rollovers they do time it so that the maturing of the prior purchase can fund the next purchase.

7) Their hours are 8:00 AM to 5:30 PM.

8) I had a 40+ minute wait. Asked if this was normal. Response? Depends upon day and time of day. I was calling around 11:30 AM today.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: New I-Bond Rate for 5/1/23 to 10/31/23

Post by Dieter »

barrett wrote: Thu May 04, 2023 4:44 am
Dieter wrote: Wed May 03, 2023 6:01 pm Barret, Hal posted the following link in a different thread, that has some timeframes, compared to existing rate of 0.4%

https://tipswatch.com/2023/04/14/i-bond ... uy-at-all/

So, less than three years for mine that have less than 0.4% fixed rate
Ah, good, so you know what I'm talking about and have already factored that into your thinking. Am I correct then that I-Bonds are a long-term investment for you Dieter?

My wife and I both purchased some 0.0% fixed-rate I-Bonds between May of 2021 and May of 2022 that have now started getting the new 3.38% rate. We may wait three months and start swapping those for higher fixed-rate bonds. Or maybe just hold onto what we have and buy more using the gift box strategy (we already "gifted" some to each other in January of this year).

The only thing I can be sure of at this point is that I will obsess about any decision I make! O0

<snip>
Yup, the plan is for these to be longer term

And, I also shall obsess over any changes 🙂

I’ll likely review in a month or so to see when the rate comes down. I do have a couple small iBonds more than five years old that I can roll over without penalty
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Re: New I-Bond Rate for 5/1/23 to 10/31/23

Post by Dieter »

vnatale wrote: Thu May 04, 2023 9:59 am Had intended to full go through this when it came out in September 2022 so as to implement.

https://tipswatch.com/2022/09/21/short- ... ctive-now/

However, since then several other things took priority. Those things have now been taken care of and I do have to time to go through it and implement what it recommends.

Still a good strategy?
I can’t say if good, and I still have more funds in online savings accounts, but I have done some of this

Although I haven’t changed shorter term to longer term, having set the various lengths to just re-invest in the same length when times up

Every once in a while I check to make sure the auto-rollover hasn’t expired. Plus to look at rates, etc, for these and my iBonds
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Re: New I-Bond Rate for 5/1/23 to 10/31/23

Post by Pet Hog »

vnatale wrote: Thu May 04, 2023 11:57 am My notes from the Vanguard phone call.

1) Auctions are held with this frequency for the following length T-Bills:

Once a week - one month, two months, three months, four months, six months

Once a month - one year, two years, three year, five years, seven years, ten years

Once a quarter - 20 years, 30 years

2) Vanguard starts taking orders at noon on Tuesdays and take them up until 9:30 AM the day of the auction (Thursdays). Can go to 10:00 AM if it is via phone call rather than online.
Vinny, you can see all the upcoming Treasury auctions, including announcement and settlement dates, in this pdf.
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Re: New I-Bond Rate for 5/1/23 to 10/31/23

Post by yankees60 »

Pet Hog wrote: Fri May 05, 2023 11:33 am
vnatale wrote: Thu May 04, 2023 11:57 am
My notes from the Vanguard phone call.

1) Auctions are held with this frequency for the following length T-Bills:

Once a week - one month, two months, three months, four months, six months

Once a month - one year, two years, three year, five years, seven years, ten years

Once a quarter - 20 years, 30 years

2) Vanguard starts taking orders at noon on Tuesdays and take them up until 9:30 AM the day of the auction (Thursdays). Can go to 10:00 AM if it is via phone call rather than online.


Vinny, you can see all the upcoming Treasury auctions, including announcement and settlement dates, in this pdf.


Yes, thank you.

I'd discovered that PDF yesterday afternoon when I called Fidelity to open an account and to ask them questions on any of their treasury bill funds (none really) which led to the person advising me to buy the Treasury Bills which then led to a discussion on buying them.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: New I-Bond Rate for 5/1/23 to 10/31/23

Post by yankees60 »

In the comments section of here:

https://tipswatch.com/2022/07/04/lookin ... ury-bills/

Read this: " I’d like to put $20K somewhere with a decent return before I spend it on purchasing I-Bonds in January (10K for my individual account and 10K for sole proprietorship account)."

Is this true that you can use your sole proprietorship to buy an additional $10,000 iBonds per year?
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: New I-Bond Rate for 5/1/23 to 10/31/23

Post by boglerdude »

Yes. You can create at least one, maybe more accounts with different EINs (Employer Identification Number) and living trusts

And im leaving the cash in vmfxx till december. or back into a rewards checking acct if rates crater.
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Re: New I-Bond Rate for 5/1/23 to 10/31/23

Post by yankees60 »

boglerdude wrote: Fri May 05, 2023 6:24 pm
Yes. You can create at least one, maybe more accounts with different EINs (Employer Identification Number) and living trusts

And im leaving the cash in vmfxx till december. or back into a rewards checking acct if rates crater.


Thanks.

Can you give more details on your rewards checking account? You get ongoing rewards in this account?
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: New I-Bond Rate for 5/1/23 to 10/31/23

Post by barrett »

vnatale wrote: Fri May 05, 2023 2:16 pm In the comments section of here:

https://tipswatch.com/2022/07/04/lookin ... ury-bills/

Read this: " I’d like to put $20K somewhere with a decent return before I spend it on purchasing I-Bonds in January (10K for my individual account and 10K for sole proprietorship account)."

Is this true that you can use your sole proprietorship to buy an additional $10,000 iBonds per year?
It's also covered in this article, along with the risks involved.
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Re: New I-Bond Rate for 5/1/23 to 10/31/23

Post by yankees60 »

barrett wrote: Sat May 06, 2023 11:23 am
vnatale wrote: Fri May 05, 2023 2:16 pm
In the comments section of here:

https://tipswatch.com/2022/07/04/lookin ... ury-bills/

Read this: " I’d like to put $20K somewhere with a decent return before I spend it on purchasing I-Bonds in January (10K for my individual account and 10K for sole proprietorship account)."

Is this true that you can use your sole proprietorship to buy an additional $10,000 iBonds per year?


It's also covered in this article, along with the risks involved.


The article I cited above? Or, one you were going to cite but did not?
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: New I-Bond Rate for 5/1/23 to 10/31/23

Post by barrett »

vnatale wrote: Sat May 06, 2023 7:50 pm
barrett wrote: Sat May 06, 2023 11:23 am
vnatale wrote: Fri May 05, 2023 2:16 pm In the comments section of here:

https://tipswatch.com/2022/07/04/lookin ... ury-bills/

Read this: " I’d like to put $20K somewhere with a decent return before I spend it on purchasing I-Bonds in January (10K for my individual account and 10K for sole proprietorship account)."

Is this true that you can use your sole proprietorship to buy an additional $10,000 iBonds per year?
It's also covered in this article, along with the risks involved.
The article I cited above? Or, one you were going to cite but did not?
Sorry about that, Vinny! Forgot to include the link but just Google "buying I-Bonds with sole proprietorship" and you'll see lots of articles on this. But I would start with this Jennifer Lammer (Diamond NestEgg) video:

https://www.youtube.com/watch?v=4f-ZIoiOFt0

Her videos are always well organized.

The "risk" that I was referring to above is that assets held by your business can be targeted if someone comes after your business. But the short answer is, yes, you can use your sole proprietorship to buy an additional $10,000 in I-Bonds per year. Note that I myself have not done this but plenty of others have.
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Re: New I-Bond Rate for 5/1/23 to 10/31/23

Post by yankees60 »

barrett wrote: Sun May 07, 2023 5:13 am
vnatale wrote: Sat May 06, 2023 7:50 pm
barrett wrote: Sat May 06, 2023 11:23 am
vnatale wrote: Fri May 05, 2023 2:16 pm
In the comments section of here:

https://tipswatch.com/2022/07/04/lookin ... ury-bills/

Read this: " I’d like to put $20K somewhere with a decent return before I spend it on purchasing I-Bonds in January (10K for my individual account and 10K for sole proprietorship account)."

Is this true that you can use your sole proprietorship to buy an additional $10,000 iBonds per year?


It's also covered in this article, along with the risks involved.


The article I cited above? Or, one you were going to cite but did not?


Sorry about that, Vinny! Forgot to include the link but just Google "buying I-Bonds with sole proprietorship" and you'll see lots of articles on this. But I would start with this Jennifer Lammer (Diamond NestEgg) video:

https://www.youtube.com/watch?v=4f-ZIoiOFt0

Her videos are always well organized.

The "risk" that I was referring to above is that assets held by your business can be targeted if someone comes after your business. But the short answer is, yes, you can use your sole proprietorship to buy an additional $10,000 in I-Bonds per year. Note that I myself have not done this but plenty of others have.


Thanks. I did discover her from that article and did watch at least three of her excellent, highly informative videos.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: New I-Bond Rate for 5/1/23 to 10/31/23

Post by boglerdude »

> Can you give more details on your rewards checking account

When rates were zero, LMCU, Consumers Credit Union, and First Bank were paying 3% with 10-15 debit transactions reqd per month

https://www.doctorofcredit.com/category ... -checking/
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Re: New I-Bond Rate for 5/1/23 to 10/31/23

Post by yankees60 »

https://www.kiplinger.com/personal-fina ... 1C057AC4F4

I-Bond Rate Is 4.30% for Next Six Months


https://www.kiplinger.com/personal-fina ... re-i-bonds

What Are I-Bonds?
Your questions answered about Series I-Bonds.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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