Announcement

Collapse
No announcement yet.

Timing of iBond purchase with interest rate increase

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • Timing of iBond purchase with interest rate increase

    Looking to purchase iBonds for the first time and am trying to figure out the best time to make this purchase. I understand that the interest rate is a composite of the fixed and inflation-adjusted rate, and the inflation adjusted rate changes May 1 and November 1. Does the fixed rate change on those same dates or is it immediately after the fed adjusts interest rates? Thanks!

  • #2
    David Enna at tipswatch.com is all you need

    the fixed rate changes 5/1 and 11/1. Most of us bought our limit last month or earlier in the year

    Comment


    • #3
      Thank you for the clarification. It looks like we won't see any impact of the recent rate increase on the fixed rate until November 1. Since we are starting to move part of the EFund to I-Bonds, I made my $10K purchase today and will do the same for my husband's $10K limit so that we can start the clock on the 1 year funds lock. We do have plenty of liquid money that the 1 year lock on funds is not going to be a problem.

      Hopefully we'll see a fixed rate greater than 0% to start 2023.

      Comment


      • #4
        The fixed rate never changes; it is locked in for 30 years.
        Your adjusted rate changes on the 6 mo. anniversary of each of your "bonds".
        The adjusted rate is so high now, that the fixed rate is irrelevant.
        Reminder: Ibonds are not bonds. they are inflation-protected cash.

        Comment


        • #5
          Bought in January. Bought some more in April Will buy more this month. Will buy more next January.

          Beginning investors worry about timing the market. Advanced investors know time in the market is more important.

          You think anyone really cares what day they bought their investments in 2012? Nope. Anything bought in 2012 was a great investment.
          Helping those who wear the white coat get a fair shake on Wall Street since 2011

          Comment


          • #6
            Originally posted by jz- View Post
            The fixed rate never changes; it is locked in for 30 years.
            Your adjusted rate changes on the 6 mo. anniversary of each of your "bonds".
            The adjusted rate is so high now, that the fixed rate is irrelevant.
            Reminder: Ibonds are not bonds. they are inflation-protected cash.
            to clarify, and I realize my reply could be misinterpreted, the fixed rate of ibonds already issued never changes. but the fixed rate for new issued bonds might be changed 5/1 and 11/1. David Enna is usually spot on with predictions as to whether the fixed rate is likely to change or not, which can influence people's buying decisons.

            Comment


            • #7
              You asked about 2 weeks too late. You had the chance to lock in 12 months at 8.54% (average) buying before the end of April.

              Buy now through October and you'll get 9.62% for the first 6 months, and a TBD rate for the following 6 months. We'll know that rate mid-October and it's based on the CPI-U from March to September.

              https://www.physicianonfire.com/buy-i-bonds/
              Why buy I Bonds? The US Treasury is paying 7.12% interest now and for the next 6 months. That's why. A step-by-step guide to purchasing Series I Savings Bonds.

              Comment


              • #8
                I appreciate jacoavlu and jz-'s contributions to ibond threads last month. They helped me realize I could get 6m of the 7.62% and still get all 6m of the 9.62%. My wife and I maxed out in April.

                Correct me if I'm wrong here but from what I understand there really isn't any point to dollar cost averaging ibonds throughout the year. If you have the extra cash & variable rates are attractive, just buy the ibonds early. Timing the market isn't an issue because there is no market. If you bought Nov '21-April '22 you would have locked in a rate that would offset inflation for that period of time. Because the OP waited until the rate changed in May, he basically lost the ability to recoup the prior 6-months worth of inflation damage on his cash. His $10K inflated 3.8% with the rest our cash in the bank while those who invested in ibonds before May will earn a corrective %7.62/y for 6M before switching to the %9.62/y rate.

                Comment


                • #9
                  It is not that simple. While the safe bet was to buy I Bonds in April to get a safe high one-year blended rate. However, there is nothing to say the I Bond inflation rate won't still be high for Nov21 - May22.

                  This could still work out for those who missed buying in April. Sure they missed out on April's interest. However, their one-year blended rate could be close to or even > those who bought in April.

                  Only time will tell.

                  Comment


                  • #10
                    Originally posted by spiritrider View Post
                    It is not that simple. While the safe bet was to buy I Bonds in April to get a safe high one-year blended rate. However, there is nothing to say the I Bond inflation rate won't still be high for Nov21 - May22.

                    This could still work out for those who missed buying in April. Sure they missed out on April's interest. However, their one-year blended rate could be close to or even > those who bought in April.

                    Only time will tell.
                    Wait a second, if you bought in April you'll get 6m of 7.6% before getting a full 6m of 9.6%. It's just staggered. You're right to say that beyond that nobody knows what the next rate will be; Nov22-May23 could be 15% in which case people who bought in May22 would get a higher blended rate their first year. But even if that's the case, people who bought in April22 will still get 6m of the 15%, albeit 5 months later than those who bought in May 2022.

                    My point was just that buying in April would have effectively let you correct for the prior 6 months of inflation your cash experienced Nov21-May22. Once we hit May the damage is done and you're only correcting for inflation for the May22-Nov22 period and beyond.

                    Comment


                    • #11
                      Redo the math.

                      Comment

                      Working...
                      X