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glorymanutdtiger
LSU Fan
Baton Rouge
Member since Jun 2012
2798 posts

Series I bond Rate is PREDICTED to be 9.62 for May

I’m glad I caught the topic last November on MT.

Really thankful to the OP who posted. Have 40K locked for 2 years
This post was edited on 4/18 at 7:57 am


plaric
Auburn Fan
Montgomery, Al
Member since Jun 2011
1968 posts

What does this mean?


glorymanutdtiger
LSU Fan
Baton Rouge
Member since Jun 2012
2798 posts

The treasury Series I bond is going to pay 9.62 interest rate. You can buy up to 10K per annum. So you can buy 20K for a couple. They pay out interest every 6 months but it’s compounded monthly.

Way better than any savings account.
rates change every November and May.

November 2021 was 7.12 and May 2022 is predicted to be 9.62.
This post was edited on 4/17 at 3:14 pm


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131
jamiegla1
Member since Aug 2016
4725 posts

the silver lining lol


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40
Pendulum
New Orleans Pelicans Fan
Member since Jan 2009
6261 posts

LINK /

Here's a link to a thread where we went deep on I bonds. If you have money sitting on sidelines you can invest for a year without needing, and you haven't maxed I bonds, look into it. Even taking max penalty will destroy yield from savings account or virtually any other similar risk free option. I maxed for me and my wife last year and this year.

Basically the "catch" is you are locked in for a year, if you sell before 5 years, you lose 3 months of accrued interest. So you can buy for a year, sell, take max penalty and still outpace a savings account by 30 to 50x


Funny how some posts in that thread have aged at this point, now that we predictably went higher on yield.
This post was edited on 4/17 at 4:10 pm


jimjackandjose
Member since Jun 2011
5903 posts

Where does one find I bonds? Can this be done through fidelity?


Fat Bastard
Atlanta Braves Fan
Member since Mar 2009
60469 posts
 Online 

TREASURY DIRECT

LINK
This post was edited on 4/17 at 4:59 pm


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40
gpburdell
Georgia Tech Fan
ATL
Member since Jun 2015
1102 posts

Yeah I started that thread. I thought about starting another thread for the new rate but never got around to it.

For those who are considering, if you buy before May 1; you will get an effective interest rate of ~8.5% for 1 year. Someone else pointed out that if you redeem before 5 years there is a 3 month interest penalty. Still easily beats any other risk free investment (i.e. HYSA or CDs)

I've got $50k in I-bonds and will earn a 4 grand over the next year. I'm building up a 1 year emergency fund in I bonds which is included as part of my bond allocation.

Fyi, there are a couple ways to buy more than $10k/year:

1) If you're married or have a trusted family member/friend. You can put in $40k (or more) into I bonds between the two of you in 1 year. First you buy $10k in I bonds for each of you individually. Then you buy a $10k gift I bond for each other. The key is to not deliver the gift via Treasury Direct until next year so you don't go over the yearly limit. It just sits in your giftbox and earns interest from day 1.

Just be aware that an I bond gift is irrevocable. Once purchased; it is legally no longer yours and no way for you to get the money back.

2) If you have a trust, that can buy $10k as well. This includes trusts that use your ssn as a tax id.

3) You can buy up to an extra $5k in I bonds through your tax return with your refund. You can make an extra $5k estimated tax payment to cover this.

This site has several good articles on various I bond topics:
https://thefinancebuff.com/tag/i-bonds


whiskey over ice
LSU Fan
Member since Sep 2020
1994 posts
 Online 

9.62 seems pretty good in most years. what's the catch?


Fat Bastard
Atlanta Braves Fan
Member since Mar 2009
60469 posts
 Online 

my complaint before was the return based on how long you had to lock up money plus penalties but my main complaint is that i cannot dump in 250k right now. at this rate i definitely would consider using them IF i could dump a quarter million now. at best i could put in 40k i think. i have a SS number and two EIN's (corp and trust) which gives me 30k and 10k for my wife. now i could keep adding annually. but who knows by then we could be back down to lower rates. when you get a rate like this i like to dump massive amounts into it now to get that return this year. i guess flip side is put in what you can now then pull out if you do not feel like adding next year. or leave it and just do not add.

putting in 250k now and getting 24k? yup. of course minus 3 months penalties. but they will not allow that.
This post was edited on 4/17 at 7:09 pm


Sho Nuff
LSU Fan
Oahu
Member since Feb 2009
11306 posts

quote:

1) If you're married or have a trusted family member/friend. You can put in $40k (or more) into I bonds between the two of you in 1 year. First you buy $10k in I bonds for each of you individually. Then you buy a $10k gift I bond for each other. The key is to not deliver the gift via Treasury Direct until next year so you don't go over the yearly limit. It just sits in your giftbox and earns interest from day 1.

Thanks for this

I was obviously going to do $20k for my wife and I but now I’ll do 40k.

ETA: I have an LLC and SP, so it looks like I’ll be able do $60k unless I’m missing something?
This post was edited on 4/17 at 7:38 pm


gpburdell
Georgia Tech Fan
ATL
Member since Jun 2015
1102 posts

quote:

ETA: I have an LLC and SP, so it looks like I’ll be able do $60k unless I’m missing something?



I believe so according to this but I've never bought for an entity before:
https://thefinancebuff.com/buy-i-bonds-business-sole-proprietor-llc.html

Also, I've read over on Bogleheads where people have bought $100k+ of I bonds for them and their spouse this year. They did this using the gift method I described and buying multiple 10k gifts. The con is it takes several years to deliver all those gifts. The gifts not delivered are still earning interest but are in limbo. They can't be redeemed until delivered; so that locks them up past 1 year.


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20
TigerTatorTots
LSU Fan
The Safeshore
Member since Jul 2009
79705 posts

So buying won’t lock in that 9.62% right? It’s a variable rate?


gpburdell
Georgia Tech Fan
ATL
Member since Jun 2015
1102 posts

quote:

So buying won’t lock in that 9.62% right? It’s a variable rate?


There is a fixed rate and variable rate. Fixed rate is currently 0% and will likely stay 0%. 9.62% is the variable rate which is annualized and resets every 6 months.

https://www.bogleheads.org/wiki/I_savings_bonds


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Teddy Ruxpin
LSU Fan
Member since Oct 2006
38030 posts

quote:

So buying won’t lock in that 9.62% right? It’s a variable rate?


The rates are locked for 6 months. When the May rate takes effect, you can buy at any time between May and November. Even if you buy in October you'll get 6 months at the May rate. Then it will change to the November rate and so on. The May rate will not be locked for the life of the bond.

However, the I-bonds have a fixed rate aspect that is locked for the life on the loan. It has been zero for years.

So the May rate is technically 0% fixed plus 9.62% variable inflation rate = 9.62%. If there ever was an increase in the fixed rate you'd keep that for the life of the bond but the variable part would change. There are some old timers from the 90s that will get something like 13/14% in May on their bonds but of course there were many lean years.
This post was edited on 4/17 at 10:27 pm


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thelawnwranglers
LSU Fan
Member since Sep 2007
33962 posts

I bought some last month will I get 2/12 of 7% rate? Kind of unclear how they prorate interest


Teddy Ruxpin
LSU Fan
Member since Oct 2006
38030 posts

quote:


I bought some last month will I get 2/12 of 7% rate? Kind of unclear how they prorate interest


No, you'll get 6 months at the 7% rate. Your rate will change to the May rate after 6 months starting in your month of purchase. For example, if you bought your bonds in March, you won't get the May rate until the Fall (October), but you'll always get six full months of each rate.

When you buy at the end of a month, you get credit for the whole month. It makes no difference if you buy March 1st, 15th, or 30th.
This post was edited on 4/17 at 10:03 pm


Fat Bastard
Atlanta Braves Fan
Member since Mar 2009
60469 posts
 Online 

quote:

You can only use regular after-tax money to buy I Bonds. They’re not available in any tax-advantaged accounts such as 401k-type plans, IRAs, or HSAs. Nor are they available through any brokerage firms such as Fidelity, Charles Schwab, or Vanguard.


cannot buy them with my solo401k even though it is a revocable trust and i am trustee.



good_2_geaux
LSU Fan
Member since Feb 2015
587 posts

So with this being said, is it better to wait until May 1st to purchase or buy now?


thelawnwranglers
LSU Fan
Member since Sep 2007
33962 posts

quote:

For example, if you bought your bonds in March, you won't get the May rate until the Fall (October),


So wait until May to buy more right?


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