I bonds

[JackDidley]

Thinking about buying an I bond. 7% is the current rate. That can change with inflation. I am trying to talk myself into going for a $5k bond for 5 years. Or just take the $5k to Jones and putting it into a mutual fund. Any thoughts ?

info here. https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds.htm

[stevej37]

EJ Advisory account.

9.72%
8.71%
14.89%
return for the last three years.

[lindbhr]

I see I Bonds as a place to put money that would ordinarily be in cash. As you said, it's currently about 7%. You can invest up to $10K per person, per year. You can cash out any time, if you need the money. One thing, they don't start posting the interest until 3 months, so you won't see it online until then.

[MRM]

It seems to be one of the best investments available. The historic average return of the S&P 500 was about 8 per cent until the last few years where the market defied gravity and drove the annual average return up past 10%. But to be able to lock into an investment that comes close to matching the broad stock market with zero risk is an incredible opportunity.

The downside is that you can only invest $10,000 per year per social security number. The good news is that you can buy through Treasury Direct with an hour or less of futzing with their website. My wife and I both put $10,000 into it just before the end of the year and did the same for both our boys and will put the same into each of our accounts again this year.

[JackDidley]

Originally Posted by stevej37

EJ Advisory account.

9.72%
8.71%
14.89%
return for the last three years.

That sound good. I looked and it seems to have a $25000 minimum. If I go over $5000 this year it will cost me in taxes. I'd like to do $5k this year and 5 to 10 k per year progressively into something safe. I am ok with a low return with low risk.

[JackDidley]

Originally Posted by lindbhr

I see I Bonds as a place to put money that would ordinarily be in cash. As you said, it's currently about 7%. You can invest up to $10K per person, per year. You can cash out any time, if you need the money. One thing, they don't start posting the interest until 3 months, so you won't see it online until then.

Originally Posted by MRM

It seems to be one of the best investments available. The historic average return of the S&P 500 was about 8 per cent until the last few years where the market defied gravity and drove the annual average return up past 10%. But to be able to lock into an investment that comes close to matching the broad stock market with zero risk is an incredible opportunity.

The downside is that you can only invest $10,000 per year per social security number. The good news is that you can buy through Treasury Direct with an hour or less of futzing with their website. My wife and I both put $10,000 into it just before the end of the year and did the same for both our boys and will put the same into each of our accounts again this year.

Thanks, guys. I like the input. I am not wealthy and just look to make a bit on what I have.

[stevej37]

I didn't know about the min...I think I transferred another acct into this when I started.
Which, if you had other accts there or otherwheres, you could do also.

[Scott Douglas]

These look like they'd be a better place to park $10k than a CD at our credit union.

[JackDidley]

Originally Posted by Scott Douglas

These look like they'd be a better place to park $10k than a CD at our credit union.

Local credit union is what I have going on now. Paying almost nothing.

[Crowbob]

W/ ibonds you earn zero interest of what you withdraw before 12 Mo. I’m not sure if you even can w/draw prior to 12 mos. You lose the last 3 months of interest on w/drawals prior to 5 years, after 5 years there is no penalty on any amount.

$10k per calendar year. In addition, you can have your tax refund deposited electronically so the max can actually be over $10k up to $15k, I think.

No minimum, IIRC.

The rate is calculated in accordance with inflation quarterly or halfly, I don’t remember which exactly.

Treasury direct is easy to work with and allows automatic deposits to whatever bank acct yourchoose. You can also set up automatic purchases.

Since it looks like inflation is here to stay, I’d suggest maxing out if you can afford tying up your cash savings on hand for 12 months.

[JackDidley]

Seems to be no downside that would make this a terrible idea. I think I will pull the trigger later today.

[Crowbob]

Let’s say painful inflation is here to stay for a few years. If you put in the max every year after the first year you can w/draw $10k with minimal pain every year. If you wait 5 years and begin a scheduled withdrawal there is no hit at all.

The downside is you have to look at this as savings uncoupled to the stock market. It is not an investment but you’ll never loose money.

On January 1 every year, $10k gets dropped in, tax refund is also deposited up to $5k. As such, overpaying income taxes to gain a big refund becomes a winning strategy.

[JackDidley]

Originally Posted by Crowbob

Let’s say painful inflation is here to stay for a few years. If you put in the max every year after the first year you can w/draw $10k with minimal pain every year. If you wait 5 years and begin a scheduled withdrawal there is no hit at all.

The downside is you have to look at this as savings uncoupled to the stock market. It is not an investment but you’ll never loose money.

On January 1 every year, $10k gets dropped in, tax refund is also deposited up to $5k. As such, overpaying income taxes to gain a big refund becomes a winning strategy.

Thanks for your thoughts. I see things pretty much the same as you. I should be able to go the five years without touching it, but you never know. It just bothers me to leave it sitting at the credit union.

[pwd72s]

Originally Posted by MRM

It seems to be one of the best investments available. The historic average return of the S&P 500 was about 8 per cent until the last few years where the market defied gravity and drove the annual average return up past 10%. But to be able to lock into an investment that comes close to matching the broad stock market with zero risk is an incredible opportunity.

The downside is that you can only invest $10,000 per year per social security number. The good news is that you can buy through Treasury Direct with an hour or less of futzing with their website. My wife and I both put $10,000 into it just before the end of the year and did the same for both our boys and will put the same into each of our accounts again this year.

Definitely the best SAFE investment...We've been buying I bonds for years, saving the bank fees by having a treasury direct account.

The big upside is that interest earned is not subject to any state income tax. A nice bonus if you live in a high income tax state like Oregon.

[JackDidley]

It is done. Account opened, bond purchased.

[fintstone]

I-Bonds have no trading cost or commission.
Interest on I Bonds can be tax-deferred for as long as 30 years.
I Bond interest is exempt from all state and local taxes.
Federal tax is exempt on I Bonds if used to pay for education expenses (under the proper conditions).

[JackDidley]

I would have liked to have learned of the I bond 5 years ago. Only discovered a couple months ago after some searching. Oh well.

[Crowbob]

Don't feel too bad, Jack. Financially, ibonds make the best sense in shaky economic times with high inflation and if you've got a bunch of cash sitting around.

However, had you been dumping money into them over the years, that pile would be growing risk-free instead of shrinking like a savings account.

[JackDidley]

Truth is, I am not a money motivated person. Never had a lot. Never been without. Thats ok. At 69 years old I just need to not run out. Anyway , I do appreciate all the input I have gotten here. Did not want to jump in eyes totally shut.