iBonds / TreasuryDirect

Discussion of the Cash portion of the Permanent Portfolio

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Dieter
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iBonds / TreasuryDirect

Post by Dieter »

So, I logged into TreasuryDirect Sunday (5/7) — uses the new login:
* Are sent a one-time passcode (OTP) every time
(can’t register your computer)

* No more using on-screen keyboard

* Password now case sensitive, based on the capitalization used for first login


I didn’t do any changes (I’m looking to “rollover” some iBonds for the higher fixed rate) —

* My older iBonds still on the higher rate

* Gonna wait for three months at the lower rate for iBonds under 5yrs old
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Re: iBonds / TreasuryDirect

Post by dualstow »

and in those 3 months, the website will have changed again. O0

I appreciate the updates. I have to login soon. It’s been awhile.
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Re: iBonds / TreasuryDirect

Post by barrett »

Thanks for posting this Dieter. Reminded me to login to check out the new & enhanced site.

Is it just me or has the site overall gotten even worse recently? There used to be a section that listed the fixed rates of I-Bonds all the way back to inception. It looks like one can only go back to 2018 now. In my case, I have paper printouts with fixed rates that I have written next to each serial number (for all my paper bonds purchased long ago).

Still clunky after all these years.
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Dieter
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Re: iBonds / TreasuryDirect

Post by Dieter »

And a video on the new iBond rate and when to maybe “roll over” 0.00 fixed rate iBonds to buy into the new 0.90 fixed rate

https://youtu.be/7ooIgdycrfw
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Dieter
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Re: iBonds / TreasuryDirect

Post by Dieter »

I just sold some 0% fixed rate I-Bonds and bought new ones at 1.3% (Fixed rate at 1.3% through the end of April)

Per one YouTube video I say, the fixed rate likely to be slightly lower May 1

And, figued 1.3% is better than my 0%, even with the 3 month interest penalty for selling before 5 years are up
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Re: iBonds / TreasuryDirect

Post by barrett »

Dieter wrote: Mon Apr 08, 2024 10:34 pm I just sold some 0% fixed rate I-Bonds and bought new ones at 1.3% (Fixed rate at 1.3% through the end of April)

Per one YouTube video I say, the fixed rate likely to be slightly lower May 1

And, figured 1.3% is better than my 0%, even with the 3 month interest penalty for selling before 5 years are up
Sounds like a good move, especially if you plan to hold the 1.3% bonds for the long term. I've thought about doing the same but I am a bit obsessed with maxing out Roth conversions both this year and next. Just don't want the extra interest income from an I-bond sale to cut into what I can Roth convert and still stay within the 12% bracket. That bracket may or may not be going away after 2025.

Also, the I-bonds that I bought in 2021 and 2022 (primarily for the high variable rate) are my second tier of money to spend from for living expenses, so they'll likely be redeemed in early 2026 anyway.

No great insight here as I am really just writing this out to clarify my own thinking.

We'll know after tomorrow's (4/10) inflation announcement for March what the new variable rate will be from 5/1/24 to 10/31/24.
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Re: iBonds / TreasuryDirect

Post by barrett »

The new variable rate on I-bonds issued 5/1/24 to 10/31/24 is 2.96%. Article by David Enna is here:

https://tipswatch.com/2024/04/10/march- ... e-at-2-96/

He is also forecasting a fixed rate of 1.2% or 1.3%. So a 4.26% composite rate more or less.
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Dieter
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Re: iBonds / TreasuryDirect

Post by Dieter »

And the final 1 May 2024 tally:

* 1.3% Fixed rate

* 4.28% composite rate

So, it worked out to buy in April

I'll likely sell more of my 0% fixed rate I-Bond (2.98%) and put into T-Bills / Treasury Money Market for now (~5.3%)

Then put back into I-Bonds a bit later -- some likely around November / some next year, depending on what rates do by then

I just don't like 0% Fixed Rate when I can move to 1.3% over time
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Re: iBonds / TreasuryDirect

Post by boglerdude »

4.28%. . .considering what they did to M2. . .and ibonds are supposed to be for the little guy. Meanwhile banks harvesting 5% on the cash they got handed in '09. something something social contract

What happens if the Fed stops paying them

https://fred.stlouisfed.org/series/M2SL
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Re: iBonds / TreasuryDirect

Post by dualstow »

TreasuryDirect to Bond Buyers: Moving Your Money Could Take a Year

Demand surges on Treasury Department’s clunky website for buying government debt, leading to backlog of customer requests
By Imani Moise | updated Oct 9, 2024
People who want to move investments from their accounts on the Treasury Department’s website to their brokerage accounts may have to wait as long as a year.

The website, TreasuryDirect, is dealing with a deluge of customer-service requests. The number of funded accounts on TreasuryDirect grew to more than four million last year, from 656,000 in 2019. Americans rushed to the website in recent years to buy inflation-adjusted savings bonds at yields nearing 10%.
likely paywalled -

https://www.wsj.com/finance/investing/t ... e-0c3313bc
.
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Smith1776
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Re: iBonds / TreasuryDirect

Post by Smith1776 »

Damn. If only there was an open, permissionless, and decentralized system that could give final settlement in an hour, anywhere in the world. ;D
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Re: iBonds / TreasuryDirect

Post by dualstow »

Smith1776 wrote: Sat Oct 12, 2024 1:23 pm Damn. If only there was an open, permissionless, and decentralized system that could give final settlement in an hour, anywhere in the world. ;D
::) O0
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Re: iBonds / TreasuryDirect

Post by yankees60 »

iBonds related.

If you have not yet bought your $10,000 limit for 2024, are you buying it this month or next?
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Re: iBonds / TreasuryDirect

Post by Hal French »

The always excellent TIPS Watch site recommends prospective I-Bond investors purchase by EOM October 2024, due to a noticeably reduced Variable Rate of 1.90 in November and a projected reduced Fixed Rate. Link to story:
https://tipswatch.com/2024/10/10/septem ... e-at-1-90/
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Re: iBonds / TreasuryDirect

Post by boglerdude »

1.2% predicted vs 1.3 on the fixed, gonna roll the dice and hope for a higher rate cuz this is chump change

Rate should be double to reward small investors. But the Social Contract has been getting torn up so I might dump some iBonds and play the leveraged ETF game
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Re: iBonds / TreasuryDirect

Post by coasting »

dualstow wrote: Sat Oct 12, 2024 8:41 am TreasuryDirect to Bond Buyers: Moving Your Money Could Take a Year

Demand surges on Treasury Department’s clunky website for buying government debt, leading to backlog of customer requests
By Imani Moise | updated Oct 9, 2024
People who want to move investments from their accounts on the Treasury Department’s website to their brokerage accounts may have to wait as long as a year.

The website, TreasuryDirect, is dealing with a deluge of customer-service requests. The number of funded accounts on TreasuryDirect grew to more than four million last year, from 656,000 in 2019. Americans rushed to the website in recent years to buy inflation-adjusted savings bonds at yields nearing 10%.
likely paywalled -

https://www.wsj.com/finance/investing/t ... e-0c3313bc
Indeed encountered paywall, but the "Key Points" summary was visible:
  • TreasuryDirect users face delays of up to a year to transfer bonds to brokerages due to high demand and an antiquated system.
  • The long wait times negate a key selling point of Treasurys, which are typically considered cash-like due to their ease of trading.
  • Financial advisers recommend using TreasuryDirect only for purchasing savings bonds and Treasurys that will be held to maturity, as most brokerages offer faster transfer times and no waiting periods.

Sigh, it just smacks of "government operation". I mean the Treasury does a fine job of handling a large number of high value transactions for a small (relatively) number of financial institutions on a daily basis. But obviously the Treasury is challenged to handle low value transactions for a large number of retail investors. And when problems arise, what are you going to do? At least in the private sector, customers can leave and move to another broker, so competition comes into play. Or if things get really bad, customers can sue. But sovereign immunity protects the Treasury.

It comes down to TreasuryDirect allows retail investors to purchase either:
1) Marketable securities: Treasury bills, notes, bonds at auction
2) Non-marketable securities: Series EE and Series I savings bonds

The marketable securities, normally very liquid and easily sold to other investors, become a hassle when purchased via TreasuryDirect if you change your mind and decide to sell. Since Treasurys can also be purchased at auction no fee through most brokers, I find no good reason to choose TreasuryDirect instead. The only minor difference I can think of is TreasuryDirect allows smaller $100 increments instead of broker minimum $1000 increments.

While the non-marketable savings bonds cannot technically be sold, they can be redeemed (effectively sold back to the Treasury) anytime after 1 year if you should change your mind. EE bonds don't really make economic sense, so you are left with I bonds as the only useful product from TreasuryDirect. Just try to never lose your password, change your linked checking account, or hit the back button in your browser while logged in, etc. ::)
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Re: iBonds / TreasuryDirect

Post by welderwannabe »

yankees60 wrote: Sun Oct 13, 2024 8:04 am iBonds related.

If you have not yet bought your $10,000 limit for 2024, are you buying it this month or next?
I bought mine earlier in the year. Wife just bought hers to lock in the fixed rate, and also bought me a $10,000 'gift box' one i'll take possession of on 1/1/25.
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Re: iBonds / TreasuryDirect

Post by Kevin K. »

Actually there are two things Treasury Direct is good for, according to the well-known David Enna of TipsWatch:

1. Buying iBonds
2. Buying T Bills and setting them up on auto-roll (which they do well and with immediate reinvestment, unlike brokerages that typically keep your money in cash for a week).

https://tipswatch.com/2024/10/13/the-on ... urydirect/

That said, I closed out our TD accounts a year ago with no regrets, due to the issues other posters have already mentioned. I'll happily use VTIP and SGOV in lieu of iBonds and T Bills and hold them at brokerages with websites designed in this century and password and security protocols that, unlike TD's, weren't (apparently) created by Alfred E. Neumann.
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Dieter
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Re: iBonds / TreasuryDirect

Post by Dieter »

coasting wrote: Thu Oct 17, 2024 7:02 pm
dualstow wrote: Sat Oct 12, 2024 8:41 am TreasuryDirect to Bond Buyers: Moving Your Money Could Take a Year

Demand surges on Treasury Department’s clunky website for buying government debt, leading to backlog of customer requests
By Imani Moise | updated Oct 9, 2024
People who want to move investments from their accounts on the Treasury Department’s website to their brokerage accounts may have to wait as long as a year.

The website, TreasuryDirect, is dealing with a deluge of customer-service requests. The number of funded accounts on TreasuryDirect grew to more than four million last year, from 656,000 in 2019. Americans rushed to the website in recent years to buy inflation-adjusted savings bonds at yields nearing 10%.
likely paywalled -

https://www.wsj.com/finance/investing/t ... e-0c3313bc
Indeed encountered paywall, but the "Key Points" summary was visible:
  • TreasuryDirect users face delays of up to a year to transfer bonds to brokerages due to high demand and an antiquated system.
  • The long wait times negate a key selling point of Treasurys, which are typically considered cash-like due to their ease of trading.
  • Financial advisers recommend using TreasuryDirect only for purchasing savings bonds and Treasurys that will be held to maturity, as most brokerages offer faster transfer times and no waiting periods.

Sigh, it just smacks of "government operation". I mean the Treasury does a fine job of handling a large number of high value transactions for a small (relatively) number of financial institutions on a daily basis. But obviously the Treasury is challenged to handle low value transactions for a large number of retail investors. And when problems arise, what are you going to do? At least in the private sector, customers can leave and move to another broker, so competition comes into play. Or if things get really bad, customers can sue. But sovereign immunity protects the Treasury.

It comes down to TreasuryDirect allows retail investors to purchase either:
1) Marketable securities: Treasury bills, notes, bonds at auction
2) Non-marketable securities: Series EE and Series I savings bonds

The marketable securities, normally very liquid and easily sold to other investors, become a hassle when purchased via TreasuryDirect if you change your mind and decide to sell. Since Treasurys can also be purchased at auction no fee through most brokers, I find no good reason to choose TreasuryDirect instead. The only minor difference I can think of is TreasuryDirect allows smaller $100 increments instead of broker minimum $1000 increments.

While the non-marketable savings bonds cannot technically be sold, they can be redeemed (effectively sold back to the Treasury) anytime after 1 year if you should change your mind. EE bonds don't really make economic sense, so you are left with I bonds as the only useful product from TreasuryDirect. Just try to never lose your password, change your linked checking account, or hit the back button in your browser while logged in, etc. ::)
Sounds like the issue is primarily moving

I've sold IBonds and transferred out money from maturing TBills with no problems this year, so, for my use case, all seems fine
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Dieter
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Re: iBonds / TreasuryDirect

Post by Dieter »

boglerdude wrote: Sun Oct 13, 2024 10:54 pm 1.2% predicted vs 1.3 on the fixed, gonna roll the dice and hope for a higher rate cuz this is chump change

Rate should be double to reward small investors. But the Social Contract has been getting torn up so I might dump some iBonds and play the leveraged ETF game
Given how bonds have done lately, I do wonder about the fixed rate in November

But, who knows

I'm not buying any more this year -- have gotten my fill on 1.3% fixed IBonds

Not the almost mythical 3% I read about from the late 20th century, but definitely better than 0
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Re: iBonds / TreasuryDirect

Post by ochotona »

I have a I-Bonds redemption question... I think I know the answer, but I wanted to make sure...

I have I-Bonds purchased in April 2020. If I sell them in April 2025 do I avoid the holding-less-than-five-year penalty even if the exact calendar dates of holding are less than five years? (bought 4/30/20220 and sold 4/1/2025 for example).

I think I'm OK selling any day in April 2025, but wanted to ask the group. TNX!
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Re: iBonds / TreasuryDirect

Post by barrett »

ochotona wrote: Thu Oct 24, 2024 6:21 am I have a I-Bonds redemption question... I think I know the answer, but I wanted to make sure...

I have I-Bonds purchased in April 2020. If I sell them in April 2025 do I avoid the holding-less-than-five-year penalty even if the exact calendar dates of holding are less than five years? (bought 4/30/20220 and sold 4/1/2025 for example).

I think I'm OK selling any day in April 2025, but wanted to ask the group. TNX!
Ocho,

According to the TD Savings Bond Calculator, your understanding seems to be correct. I plugged in a "phantom" I-Bond with a purchase date of 04/2019. As of 03/2024 it still showed that it would be hit with the three-month penalty. That is indicated as "P5". Then, when I set the calculator to 04/2024, that P5 went away.
When hitting the five-year period, I also notice the interest jumping the equivalent of four months worth.

Hope this helps.
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ochotona
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Re: iBonds / TreasuryDirect

Post by ochotona »

Thank you so much, I've actually never used that calculator before, it's good to know about it.

Yeah, the March 2021 cohort of bonds has a fixed rate of 0%, I need to at least sell them and buy with a higher fixed rate... while we have it.
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Re: iBonds / TreasuryDirect

Post by yankees60 »

I moved my money from Vanguard to bank so it will be there on Monday.

What is the final thought here on buying in October or November?
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Re: iBonds / TreasuryDirect

Post by barrett »

ochotona wrote: Thu Oct 24, 2024 1:16 pm Thank you so much, I've actually never used that calculator before, it's good to know about it.

Yeah, the March 2021 cohort of bonds has a fixed rate of 0%, I need to at least sell them and buy with a higher fixed rate... while we have it.
Again, using TD the calculator, it looks like a $1,000 March of 2021 bond is now worth $1,185 for a gain of 18.5%. CPI-U officially went up 15% during that time so you've made money before taxes. I have some bonds purchased in both 2021 & 2022 to get those good inflation rates while they lasted. But I am holding the $30,000 that I purchased (used the gift box for both me and my wife) as one of our mid-range spending money sources. In my situation, it doesn't make sense from a tax perspective to sell them because I am right at the top of the 12% tax bracket from Roth conversions for 2024 and I don't want to pay 22% in taxes on those bonds. Selling 2021 bonds might be a bit of a complicated calculation depending on your tax situation... as in "How long would I need to collect the 1.3% fixed rate to make up for paying taxes at X% now?"

But your post got me wondering if maybe I should gift box $10,000 of the 1.3% fixed rate bonds to my wife for delivery in January of 2025. And maybe have her do the same for me. Hmm.
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