New iBond rate 1.68%

[jhogue]

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.

[GT]

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!

[boglerdude]

> 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.

[ochotona]

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.

[jhogue]

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.

[vnatale]

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"!

[sophie]

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.

[boglerdude]

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

[jhogue]

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.

[ochotona]

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.

[ochotona]

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.

[ochotona]

Maybe the "I Desert" portfolio. Substitute the 10 year Treasuries with I-Bonds.

[boglerdude]

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

[jhogue]

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

Not sure where you got your information. An I-bond purchased from November 2018 through April 2019 has a current composite rate of 2.18%. See TreasuryDirect's official table located at:

https://www.treasurydirect.gov/indiv/re ... positerate

Note that if you cash that I bond before it is 5 years old, you will pay a penalty of the 3 previous months interest, which will reduce your effective yield.

[barrett]

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

I have wondered the same thing about some bonds in our inventory. According to the Treasury Direct online calculator, a couple of I-Bonds from 2007 are currently yielding 1.06% and a few from 2010 are yielding 1.26%.

Wouldn't this only make sense if some I-Bonds were issued with a negative fixed rate?

ETA: This issue "goes away" if I set the calculation date to 4/1/21. So it's likely that bonds that were set with an original inflation rate of less than 1.68% don't instantly start paying 1.68%... or something like that.

[boglerdude]

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

Not sure where you got your information. An I-bond purchased from November 2018 through April 2019 has a current composite rate of 2.18%. See TreasuryDirect's official table located at:

https://www.treasurydirect.gov/indiv/re ... positerate

Screencaps from my account. Should I email them?

ibonds-rate.png (10.1 KiB) Viewed 2442 times

[barrett]

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

On the TD website, if you set the "Value as of" date for that 4/1/2019 bond to 4/1/2021, what do you then see for the yield?

For I-Bonds that I purchased on 10/1/2010, I am seeing the current yield as 1.26%. When I set the "Value as of" date to 4/1/2021, that jumps to 1.88%. So my 10/1/2010 bonds have a fixed rate of .2% plus the current inflation kicker of 1.68%.

To be clear, I am not saying that I understand WHY the interest rate only adjusts upward at six months intervals. But that does seem to be what happens.

jhogue???

[boglerdude]

"I-bonds reset on their anniversary. The rate will update in April to 2.18%, and then be in effect through September."

https://www.bogleheads.org/forum/viewto ... &p=5732240