Series I Bonds

[CaffeineNepenthe]

https://www.treasurydirect.gov/indiv...rms.htm#change

The fixed rate is locked for the 30 yr life of the bond.
The variable rate resets every 6 months.
The total is what you earn which will change every 6 months.
The design is only to lock in inflation protection. No trading really. You can let a zero fixed expire and buy the new combined rate. Thus I disagree with the long run conclusion. The problem is, the rebalancing is limited due to the holding periods and new purchase limits of $10k. It is not permanent, but it is gradual. If you want fixed, EE bonds (not the same fixed rate and no inflation adjustment).
IBonds by design will adjust in total only to inflation. The fixed interest play you are attempting will be difficult.

Thanks. I plan to accumulate them gradually (maxing out annually) over the next few decades. Given the 10K/y limit and the fact variable and fixed rates are adjusted twice per year, I think it makes sense to buy my 10K when fixed rates are the highest. It's impossible to forecast ahead but any future fixed rate is >=0% which makes waiting until May seem like a good option, regardless of how good variable rates are now. Is that fair?

[Tim]

“Is that fair?” Fair, yes. Whether foregoing two months of total interest is worth it for a relatively small amount of the fixed interest component remains to be seen. The prospect of inflation and the inflation component is what has sparked the attractiveness. I will say, a fixed component of 6% would be extremely attractive. I think that would be fair too. The amount of money involved strategizing fixed component will never move the needle. Needs to be understood, but the inflation protection for small amounts are by design. You won’t achieve “alpha” by waiting. Fair?

[CaffeineNepenthe]

“Is that fair?” Fair, yes. Whether foregoing two months of total interest is worth it for a relatively small amount of the fixed interest component remains to be seen. The prospect of inflation and the inflation component is what has sparked the attractiveness. I will say, a fixed component of 6% would be extremely attractive. I think that would be fair too. The amount of money involved strategizing fixed component will never move the needle. Needs to be understood, but the inflation protection for small amounts are by design. You won’t achieve “alpha” by waiting. Fair?

Fair, lol.
I started another thread w/ some separate questions about ibonds. Hoping you could weigh in. Thanks.

[Lithium]

The rate is 9.62% for the next 6 months. I’ll be dumping in $30k on 4/29/22

[JBME]

if we dumped money into ibonds back in october when the rate I think was 7.62%, do we continue to get that rate, or did it just shoot up another 2% and we'll get that "benefit" as well?

[Lithium]

if we dumped money into ibonds back in october when the rate I think was 7.62%, do we continue to get that rate, or did it just shoot up another 2% and we'll get that "benefit" as well?

If you invested in October, I believe you get 6 months at the interest rate in 5/2021, then starting this month you get 6 months at 7.12%. Starting 10/22 you’ll get 6 months at 9.62%.
If you invest on 5/1 you’ll immediately get 6 months at 9.62%. The benefit of investing before 5/1 is to lock in 6 months at the current rate of 7.12% which is still well above average.

[xraygoggles]

If you invested in October, I believe you get 6 months at the interest rate in 5/2021, then starting this month you get 6 months at 7.12%. Starting 10/22 you’ll get 6 months at 9.62%.
If you invest on 5/1 you’ll immediately get 6 months at 9.62%. The benefit of investing before 5/1 is to lock in 6 months at the current rate of 7.12% which is still well above average.

The only conundrum is whether to lock in the rates now at 7.12 & 9.62, or wait till May, and get 9.62 for 6 months, but then who knows what the next 6 months will be.

I would rather get the guaranteed 7.12/9.62. Even though I have a large amount in stablecoin yields at 7-8%, these rates for Ibonds are very good, especially with the full backing of the US govt - can't really complain.

[Lordosis]

The only conundrum is whether to lock in the rates now at 7.12 & 9.62, or wait till May, and get 9.62 for 6 months, but then who knows what the next 6 months will be.

I would rather get the guaranteed 7.12/9.62. Even though I have a large amount in stablecoin yields at 7-8%, these rates for Ibonds are very good, especially with the full backing of the US govt - can't really complain.

Even if you buy now you will get 7% for 6 months than you will get 9% for 6 months. You always get 6 months of each rate change.

If you wait you miss it.

[HumbleInvestor]

Can you buy them under your business EIN? If you have a S-Corp, can you buy 10k and personal SSN for 10k? For a couple I am assuming you can buy 20k? Thanks

[uksho]

Can you buy them under your business EIN? If you have a S-Corp, can you buy 10k and personal SSN for 10k? For a couple I am assuming you can buy 20k? Thanks

I assume you can buy more in trust . Is it worth it ?can the trust be established online cheaply ? It might pay some Especially if inflation doesn’t subside soon. We already bought 20 K last year and 20 K this year .

[jacoavlu]

the limit has always been 10k per person and 5k more on a tax return for ibond freaks

this idea of buying more with another EIN / trust is a new thing which some including Harry Sit who I really respect has put forward and it’s a trend but definitely a gray area and I’m not convinced it’s within the rules.

i need to go chec tipswatch he’s the ibond authority and always on point regarding when to buy. I haven’t bought yet this year waiting for his advice as to whether he thinks fixed rate likely to jump

[xraygoggles]

i need to go chec tipswatch he’s the ibond authority and always on point regarding when to buy. I haven’t bought yet this year waiting for his advice as to whether he thinks fixed rate likely to jump

How can he possibly foretell what the rate will be in another 6 months?

[jacoavlu]

How can he possibly foretell what the rate will be in another 6 months?

I said the fixed rate

and anyway the variable rate (which you reference) is based on published government data

https://tipswatch.com/

[nephron]

I put 10K into i bonds earlier this year. I haven't put 10K in for my wife yet because the the wording on the website is tricky. If I want her in my account, do I add her as a new registrant, sole owner, primary owner, or beneficiary if the account is in my name but I want to purchase the bonds in her name/tax id? 7-9% interest rate with no risk seems lucrative until you realize that it is designed to be a 0% rate of return after accounting for inflation. Add on the fact that you can only hide 10K of your assets in this 0% rate of return account while rest of your accounts all lose value due to market losses and inflation, it gets depressing.

[jacoavlu]

spouse is separate account

analyze all you want. Have you sold your total bond fund that’s earning less?