I-Bonds - buy more before 1 Nov 2025 reset?

[Dieter]

So, given the expectation that fed rates are coming down in the near future, anyone else thinking about getting I-Bonds before 1 Nov 2025 to lock in the 1.1% fixed rate?

On my 'likely' to do list for late September or October

I-Bond - "Cash" with:
* Currently 3.98%
- Guaranteed at least 1.1% for up to 30years
- Inflation Adjusted (yeah, it's not the 'real' rate of inflation, but, it's something)
* No state tax
* Deferred Federal Taxes until sell
* If buy late in a month, get interest for the full month
* If sell early in a month, get interest for the full month

Yeah, a little less than MM right now -- Vanguard MoneyMarkets are around 4.2%

I didn't realize that Ally and Capital One are at 3.5%, so, less while being fully taxable

Am I missing any downsides? (Other than can't access for one year; lose 3 months of interest if sell within 5years)

Seems good (least bad) for deep cash \ emergency fund

[boglerdude]

Downside is Leftists will be happy with 8% M2 if they can blame Trump, so buckle up

At what rate on current ibonds you hold, does it make sense to sell then buy at 1.1% fixed. Considering 3 mo interest penalty

edit: Here are the breakevens https://youtu.be/k1etC0wGFHE?t=217

[yankees60]

So, given the expectation that fed rates are coming down in the near future, anyone else thinking about getting I-Bonds before 1 Nov 2025 to lock in the 1.1% fixed rate?

On my 'likely' to do list for late September or October

I-Bond - "Cash" with:
* Currently 3.98%
- Guaranteed at least 1.1% for up to 30years
- Inflation Adjusted (yeah, it's not the 'real' rate of inflation, but, it's something)
* No state tax
* Deferred Federal Taxes until sell
* If buy late in a month, get interest for the full month
* If sell early in a month, get interest for the full month

Yeah, a little less than MM right now -- Vanguard MoneyMarkets are around 4.2%

I didn't realize that Ally and Capital One are at 3.5%, so, less while being fully taxable

Am I missing any downsides? (Other than can't access for one year; lose 3 months of interest if sell within 5years)

Seems good (least bad) for deep cash \ emergency fund

The ever-present downside is being limited to buying $10,000 per year (the $5,000 more from tax return has been taken away). So not something to be used as part of a grand portfolio repositioning.

[Dieter]

So, given the expectation that fed rates are coming down in the near future, anyone else thinking about getting I-Bonds before 1 Nov 2025 to lock in the 1.1% fixed rate?

On my 'likely' to do list for late September or October

I-Bond - "Cash" with:
* Currently 3.98%
- Guaranteed at least 1.1% for up to 30years
- Inflation Adjusted (yeah, it's not the 'real' rate of inflation, but, it's something)
* No state tax
* Deferred Federal Taxes until sell
* If buy late in a month, get interest for the full month
* If sell early in a month, get interest for the full month

Yeah, a little less than MM right now -- Vanguard MoneyMarkets are around 4.2%

I didn't realize that Ally and Capital One are at 3.5%, so, less while being fully taxable

Am I missing any downsides? (Other than can't access for one year; lose 3 months of interest if sell within 5years)

Seems good (least bad) for deep cash \ emergency fund

The ever-present downside is being limited to buying $10,000 per year (the $5,000 more from tax return has been taken away). So not something to be used as part of a grand portfolio repositioning.

Well, good (and bad) for me, I'm not looking to move even $10,000 into iBonds this year

[welderwannabe]

Seems good (least bad) for deep cash \ emergency fund

Excellent for an efund. Thats where I keep mine. IBonds are a good deal for cash.

[sophie]

I got my I-bonds in January as usual...

I'm not sure I-Bonds are a great idea for an emergency fund. As time goes on and interest accumulates, the bar will get higher and higher to cash them out - because you'll owe tax on the accumulated interest all at once, plus selling them before maturity is a lost opportunity - and worse yet if the bond is less than 5 years old. You'd probably be better off selling stocks - better tax rates on the gains, and it'll be very easy to buy that stock again.

I could see selling I Bonds if you have a prolonged period of unemployment causing your income to drop drastically, but not if, say, your A/C blows up and you need to dip into your fund for a new one. So I think of mine as cash in a deep freeze - to be used only after retirement, or in an emergency with the stock market in a deep correction making it the only place to raise money.

[Dieter]

Well, it seems a better deep emergency fund location vs high-yield savings accounts, CDs, or money market accounts for me

Especially if rates drop and\or inflation picks up

For times don't want to sell gold, stocks, or bonds

[welderwannabe]

Well, it seems a better deep emergency fund location vs high-yield savings accounts, CDs, or money market accounts for me

My wife says im like the Planet Saturn, except I have multiple rings for emergency funds.
Savings bonds are not my first efund ring, I have a HYSA for that at a LOCAL bank with 1 month of expenses in it.

However, I wouldnt use stocks for an efund as their value fluctuates too much, prefer cash. IBonds are very cash like as there is no principal risk like selling a bond into a period of rising rates, plus they are tax deferred, and inflation adjusted.

If my AC blew up, I would prefer to sell stocks with the highest basis, and hopefully at the LTCG rate. However, if the market is on fire, the savings bonds will be my choice after I drain the local bank HYSA.

I also don't consider an AC dying an emergency, nor needing to get a roof repaired, or the car fixed. I have funds for these things set aside. For me an emergency is a long term job loss, which is more likely to happen in concert with a stock market explosion ala 2008, or march of 2020. For those things, I want cash cash cash, and iBonds are as good as cash (better in fact).

[Dieter]

I got some more iBonds in late October with the fixed 1.1% rate

As of Nov 1, .9% fixed rate