New iBond rate 1.68%

Discussion of the Cash portion of the Permanent Portfolio

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Kevin K.
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New iBond rate 1.68%

Post by Kevin K. » Wed Oct 14, 2020 7:16 pm

New rate and an interesting strategy for buying them:

https://seekingalpha.com/article/437910 ... quote_news

Best option out there for cash it seems (if you can get past the 10K annual purchase limit and having to have a separate Treasury Direct account).
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Re: New iBond rate 1.68%

Post by jhogue » Sun Oct 18, 2020 10:45 am

1. To give it some context, the 1 November I-bond yield of 1.68% is better than on-line Ally Bank's advertised 5 year CD (1.00%) or a 10 year Treasury (0.77%). The best no-risk short term investment out there today-- and probably the only one without a negative real yield right now.

2. Don't forget that you can buy up to $5,000 of paper I-bonds with your annual income tax refund.

3. Or set up a payroll savings plan with your employer in any amount of $25 or more. Stodgy as that may sound, that is what young investors should be doing as an automatic check-off item on their monthly budget, which is what millions of small savers did during and after World War II.
“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 iBond rate 1.68%

Post by jhogue » Tue Dec 29, 2020 2:20 pm

Only a few more days to buy I-bonds for 2020 at the current rate of 1.68%.
This current rate easily beats a 10 year Treasury note (0.93%) or a popular 5 year Ally CD (0.85%).
“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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vnatale
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Re: New iBond rate 1.68%

Post by vnatale » Tue Dec 29, 2020 5:32 pm

jhogue wrote:
Tue Dec 29, 2020 2:20 pm
Only a few more days to buy I-bonds for 2020 at the current rate of 1.68%.
This current rate easily beats a 10 year Treasury note (0.93%) or a popular 5 year Ally CD (0.85%).
You have preached long and hard regarding these.

You convinced me LONG ago!

My only issue with them is that there is an annual limit for a single person $15,000 (without going through gyrations to create other financial vehicles). For my present financial situation, if it were possible, it'd not be a bad move for me to invest my entire portfolio in them and nothing else. However, that is, obviously, NOT possible.

In July this year I rigged my 2019 tax return so that I'd get an exact $5,000 refund with an accompanying n filled form directing such $5,000 refund to be used to purchase iBonds.

However, to my dismay, shortly after, the only outcome was me getting a $5,000 refund (with interest!).

If you response to this in time I will then make it my top priority to purchase $10,000 of them for 2020.

Can you please give me the outline of steps I need to do so that I can buy $10,000 of them?

I know I can find this elsewhere in the forum. But if you really want to have a converted disciple it'd be helpful to get that outline here.

Thanks

Vinny
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 iBond rate 1.68%

Post by Xan » Tue Dec 29, 2020 5:34 pm

Vinny,

You go to TreasuryDirect.gov and buy some.

I'm disappointed to hear that you didn't get your $5K in paper bonds! I did the same thing, but the IRS has been very slow to process my return. They lost the back page of it and haven't yet processed the page I sent to them. So I don't know whether I'll get my bonds or not. Sounds like I might not, based on your story.
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Re: New iBond rate 1.68%

Post by vnatale » Tue Dec 29, 2020 6:05 pm

Xan wrote:
Tue Dec 29, 2020 5:34 pm
Vinny,

You go to TreasuryDirect.gov and buy some.

I'm disappointed to hear that you didn't get your $5K in paper bonds! I did the same thing, but the IRS has been very slow to process my return. They lost the back page of it and haven't yet processed the page I sent to them. So I don't know whether I'll get my bonds or not. Sounds like I might not, based on your story.
Will do that within the next 1/2 hour.

Did you file efile or paper? This was the first time I'd ever efiled.

Vinny
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 iBond rate 1.68%

Post by vnatale » Tue Dec 29, 2020 6:51 pm

Did it!!!

Thanks to Xan & jhogue!!!!

Super easy and quick!

Below is my proof of the deed!

You CAN do it TOO!

Vinny

Capture.JPG
Capture.JPG (76.73 KiB) Viewed 1216 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 iBond rate 1.68%

Post by Kriegsspiel » Tue Dec 29, 2020 7:08 pm

Thanks for the reminder hogie, just bought some.
"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.
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Re: New iBond rate 1.68%

Post by vnatale » Tue Dec 29, 2020 7:33 pm

For next year I'll add another thing to that "list".

Seeing what I can do to increase my $15,000 a year limit. To see if any of them seem realistic and cost and time effective.

Someone here did send me a private message directing me to a discussion regarding it in the Bogle Heads Forum? I'll have to go back among my private messages to unearth that one.

Vinny
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 iBond rate 1.68%

Post by Xan » Tue Dec 29, 2020 7:55 pm

vnatale wrote:
Tue Dec 29, 2020 6:05 pm
Xan wrote:
Tue Dec 29, 2020 5:34 pm
Vinny,

You go to TreasuryDirect.gov and buy some.

I'm disappointed to hear that you didn't get your $5K in paper bonds! I did the same thing, but the IRS has been very slow to process my return. They lost the back page of it and haven't yet processed the page I sent to them. So I don't know whether I'll get my bonds or not. Sounds like I might not, based on your story.
Will do that within the next 1/2 hour.

Did you file efile or paper? This was the first time I'd ever efiled.

Vinny
Paper. Maybe I'll have better luck with the bonds? Certainly didn't have better luck in terms of them losing a page.

The funny thing is that it was a page that described why I owed them a couple extra hundred bucks. The letter I got said that they'd disallow the amount on the return unless they got the extra page.
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Re: New iBond rate 1.68%

Post by boglerdude » Tue Dec 29, 2020 10:46 pm

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Re: New iBond rate 1.68%

Post by vnatale » Tue Dec 29, 2020 11:28 pm

boglerdude wrote:
Tue Dec 29, 2020 10:46 pm
Get married Vinny. Or trust/LLC

https://www.bogleheads.org/forum/viewtopic.php?t=213142
NOT getting married! Ask Pugchief about that one! Could end up with many, many, many times the slight advantages owning additional iBonds will give to me.

But I thought it had been you who had sent to me the private message regarding the Bogle Heads discussion on the topic?

VInny
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 iBond rate 1.68%

Post by jhogue » Wed Dec 30, 2020 7:35 am

Vinny,
Congratulations on your I bond purchase and welcome to the club.

There are several different tricks that can be used to increase I bond holdings that have been described in various threads. I have encouraged investors to treat their I-bonds as part of a long term strategy that Medium Tex described as "deep cash." Right now, my Cash quadrant consists of 50 % savings bonds.

Diversifying away from banks and brokerage houses and gaining inflation-proof, 30 year tax deferred cash gives me a warm feeling. The current yield is simply icing on the cake.
“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 iBond rate 1.68%

Post by GT » Thu Dec 31, 2020 10:58 am

vnatale wrote:
Tue Dec 29, 2020 6:51 pm
Did it!!!

Thanks to Xan & jhogue!!!!

Super easy and quick!

Below is my proof of the deed!

You CAN do it TOO!

Vinny


Capture.JPG
Nice Vinny - Well done!
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Re: New iBond rate 1.68%

Post by boglerdude » Thu Dec 31, 2020 8:17 pm

> I thought it had been you who had sent to me the private message regarding the Bogle Heads discussion on the topic?

Seems like something I wouldve posted publicly for the commonweal.

I got locked out my TreasuryDirect account for one failed login attempt. Have to call Monday.
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Re: New iBond rate 1.68%

Post by ochotona » Fri Jan 01, 2021 8:43 am

I just bought my 2021 I-Bonds, I now have $99,740 in I-Bonds. My first bunch of 2016 I-Bonds will become liquid in April 2021. I'm going to keep growing and growing this pile. I want this to be my dominant form of cash equivalent.
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Re: New iBond rate 1.68%

Post by jhogue » Fri Jan 01, 2021 9:35 am

ocho,

Congratulations on your big pile of I-bonds.

One (minor) correction: Any I-bonds that you bought in 2016 became liquid in 2017. In April of 2021 they will become completely penalty free.
“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 iBond rate 1.68%

Post by vnatale » Fri Jan 01, 2021 11:19 am

ochotona wrote:
Fri Jan 01, 2021 8:43 am

I just bought my 2021 I-Bonds, I now have $99,740 in I-Bonds. My first bunch of 2016 I-Bonds will become liquid in April 2021. I'm going to keep growing and growing this pile. I want this to be my dominant form of cash equivalent.


Which means you are telling me I should now buy my 2nd ever purchase of iBonds by buying the second $10,000 today? Or, as close as possible to January 1st? The same way I tried to make my IRA contributions as close as possible to January 1st?

I behave so often in a binary fashion. Either all the way or no way. Either on or off.

The iBonds switch has finally been turned to "on"!


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 iBond rate 1.68%

Post by sophie » Fri Jan 01, 2021 11:58 am

Just FYI.....

There's no need to buy I Bonds until the end of the month, because you get credit for the entire month of interest no matter when in the month you buy.

Of course, it's not like you're going to miss out on any significant amount of interest by doing that this year.
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Re: New iBond rate 1.68%

Post by boglerdude » Fri Jan 01, 2021 12:59 pm

Buy in December. The lost interest is trivial, and maybe the base rate will be higher.

And you'll have more information by December, no need to tie up your funds early. the argument in favor of procrastination
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Re: New iBond rate 1.68%

Post by jhogue » Fri Jan 01, 2021 3:37 pm

In the short term, I bought I bonds for their yield, but worried about their liquidity.

The longer I have held them, the more I have realized that I bonds are the Swiss Army Knives of cash equivalents. They can play many roles in almost any investment portfolio.

Changes in I-bond rates are announced each May1 and November 1. Therefore, the optimal times to buy are the week before each of those dates since you can compare the current known rate and the likely next rate.
“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 iBond rate 1.68%

Post by ochotona » Fri Jan 01, 2021 7:39 pm

sophie wrote:
Fri Jan 01, 2021 11:58 am
Just FYI.....

There's no need to buy I Bonds until the end of the month, because you get credit for the entire month of interest no matter when in the month you buy.

Of course, it's not like you're going to miss out on any significant amount of interest by doing that this year.
Thanks about beg/end of month advice. I don't think the base rate is going up in 21 based on Fed forward guidance If I'm wrong, I won't be badly wrong. It will be a pennies error.

Right I have liquidity now, but seeking no penalty.
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Re: New iBond rate 1.68%

Post by ochotona » Fri Jan 01, 2021 7:46 pm

jhogue wrote:
Fri Jan 01, 2021 3:37 pm
The longer I have held them, the more I have realized that I bonds are the Swiss Army Knives of cash equivalents. They can play many roles in almost any investment portfolio.
I would be totally happy with an I-Bonds, Gold, and Equities 3-way portfolio. I think they are great.
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Re: New iBond rate 1.68%

Post by ochotona » Fri Jan 01, 2021 9:17 pm

Maybe the "I Desert" portfolio. Substitute the 10 year Treasuries with I-Bonds.
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Re: New iBond rate 1.68%

Post by boglerdude » Wed Jan 06, 2021 7:20 pm

Why is my ibond puchased 04-01-2019 at 1.56%. Shouldnt it be the same 1.68% as the bond purchased last week
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