When Should You Buy I Bonds in 2023?

[@rob_berger]

Keep in mind that you don't have to buy $10,000 of I bonds all at once. You can spread the purchases out over the year. So, for example, you could buy $5,000 before the rate change in May and $5,000 after, thereby hedging your bet on the fixed rate.

[@marklitko483]

Rob, I have series EE bonds they pay a low rate of interest near maturity anyway, should I redeem some and purchase some I bonds for a better rate?

[@thoryan3057]

@@marklitko483 If they are close to maturity hold on to them, they have a guarantee to double at a minimum if they are held until the 30-year maturity.

[@kinpatu]

@@thoryan3057 Double at 20 years.

[@thoryan3057]

@@kinpatu You're right. Not too shabby.

[@jroysdon]

Also be aware that if you buy a $10K I Bond, you have to redeem the entire $10K at once. What if you only need $2K? You cannot break it up in smaller redemption amounts. So what we've done is buy them in $1K and $500 amounts, even when we buy say $4K on a given day. We've been slowly moving over some of our Emergency Fund over to I Bonds as we grow it (but still keeping enough in cash in case we needed it, until our I Bonds age to 1 year so we'd be able to redeem them if needed).

[@jzhou23]

wow, I was searching for videos of I Bonds in 2023 and found this one posted 5 mins ago. :)

[@carya746]

With the rates on I Bonds going down, I am looking at moving to T Bills.

[@lanterngals]

Rob, thanks for this video. I made a decision to sell my TIPS ETFs early last year before the FED began rasing rates. I made the decision this year to stop buying I Bonds. I think that the inflation protection is not an advantage as inflation begins falling. Instead, I made the decision to buy the range of Treasury Bills in 4, 8, 13, 17, and 26 weeks. I will continue to roll these until rates stop rising. At that time I will lock in on T Notes of 2-10 years for much of my bond allocation. I will keep the I Bonds that I have for now, but will be looking at the potential to sell them and invest similarly if I see the numbers work. You can purchase them within your IRA and ROTH unlike the I Bond. Can you do a show on the advantages of using T Bills and Notes?

[@charlesmorgan1202]

Hi Rob, Thanks for your videos. Regarding I-Bonds, I happened to purchase my first I-Bonds back in 2001 when the fixed rate was at its highest (3.6), although I didn't know that at the time. I figured that for some risk-free emergency funds (or think of it as deep savings), making at least 3.6% per year or more (unless negative inflation) wasn't too bad. I stopped buying I-bonds when the fixed rate dropped off and only jumped back in when rates ticked back up. If you've mentioned this, my apologies, just thought it was worth mentioning. You can go much higher than 15k depending on your situation. If a couple had children, you could also do 10k for each child. If you have a living trust, that's another 10k. An S-Corp or LLC, another 10k. You can also do gifting, say between family members, friends, etc. These bonds effectively sit in limbo until delivered, earning current rates. Some extra tips in case another short-term opportunity comes up down the road.

[@jroysdon]

Also you can have your employer over withhold your payroll taxes and when it comes time to file you can get up to another $5K in I Bonds.

[@michaelevans5328]

Thanks, Rob. What Schwab TIPS fund do you use? Is a short-term TIPS fund like VTIP okay for someone who has a two-year cash bucket (for peace of mind) and wants 50% of the bond portion of their investment bucket in inflation-protected bonds? Seems like choosing a fixed-income strategy is 10 times more complicated than choosing a stock strategy.

[@alan30189]

I have a question for you. If you withdraw from your I-bond, say, in three years, what determines the interest penalty? Is it the interest being paid at that point in time, which in three years might be 3%, or less, or is it an average of the interest rates that you have earned over that three year period?

[@kurt666morris]

Rob, I have an appointment with my CPA in late February. She was really ignorant when I brought up I Bonds on the phone with her today. She said her computer software only allows her to send refund checks to accounts with Routing and Account numbers. Do I Bonds have a routing and account number where the refund check can be deposited? Do I have to set 1 up before any money can be put in it? ....I'm sorry she is so ignorant on this matter. She deals with clients like Lawyers, Doctors, Entertainment people, etc. where 5 or 10 thousand doesn't mean much, like it does to a small investor like me. Thanks for your help.

[@tom99790]

I stopped buying them when they discontinued issuing the paper ones..just way to confusing to be able to access the one I have that’s only on the computer.

[@darylcrow810]

Hi Rob, Thanks for taking the time to make this video. I have a question that I can't find anyone covering on how to handle reporting the interest when holding the I bonds within an LLC. I'm curious how you manage your interest in the account for your LLC. If I record the interest in Quickbooks, it will reflect in both my balance sheet and Profit and Loss. However, since my income is based on the Profit and Loss statement it seems I would be paying taxes on the income now instead of when I redeem the I bonds. Let me know if I'm missing anything, but it seems the two options would be 1) not to recognize the interest until I redeem the bonds. By doing this I would list the initial purchase as an asset in quickbooks. When I eventually redeem the bond I would recognize all the interest and pay taxes on them at that point. 2) Recognize the interest as they are paid by the treasury in quickbooks. By doing this I would be paying taxes on the interest each year. My understanding is there is some extra paperwork or tracking I would need to do in order to keep from paying taxes again when selling the I bonds. All that to say, what are you doing?

[@stevemar8027]

You can get 3.5% on an online savings account. Isn’t the 6.85% ibond annualised or only 3.42% over the 6 month inflation period ? If you are short term, why wait until April, especially if you want to take the money out in a year ? Wouldn’t you want the year minimum holding to start asap ?

[@nealinnc]

yes absolutely buy in January. Inflation is not going down much if at all.

[@shortythefrenchie]

Rob thank you for another informative video! What is your advise for short term holder with reference to a gift purchased in 2022 thinking of issuing it now?

[@lamelobowling5552]

How much income can you make from bonds and what is the frequency of payments?

[@Jane-oc5hy]

Rob, thank you for doing this video. It was very helpful and I'm glad to hear I wasn't the only person with this question. Keep up the great work!

[@Neo_Finance1]

I ladder them monthly, just like with my dividend income, t-bills, and options. These will be amazing when I start to collect these each month (plan on holding till end of appreciation)

[@suederuyter851]

Now that it’s April, do you have an updated recommendation? Also, what about if we followed your suggestion of holding a gift of an Ibond to our spouse last year, should we gift it now?

[@rob_berger]

Actually yes! We be releasing a video later this week after the CPI numbers come out tomorrow.

[@rosemarylafata1178]

Rob, why not buy I bond now to get a full 4 mos. of 6,8% interest rather than wait until April when it may be lower? I made the mistake last year waiting until May to buy, and I lost the rate of 9.62% opposed to the 8.6% rate offered at the time.

[@roox101481]

Because you get the full 6 months of 6.8% no matter when you buy it, as long as it's before may when the new rate comes into effect. Your 6 month will start and then the new rate comes into effect for you 6 months later. Also, buy at the end of the month, you get a full month credit no matter when you put your money in.

[@chayden1402]

What tips fund do you use for schwab? Or which one do you recommend for a long-term investor

[@TheoneGodfather]

I’m $100 k over the $250k insured amount in a savings account. I need to do something with that 100 just to be safe. Are short term bonds a good idea? Thanks.

[@aaront936]

Bonds shouldn't be a long term investment. If your investing for the long term buy stocks .

[@robertsmith6408]

Rob, what do you think of TLTW? Based on 20 year treasury Bond Buyright Strategy? It is a new product from Ishares and currently pays 17.75 dividend payment. Thinking of adding it to my JEPI, JEPQ and BSTZ ETFs that I use to supplement my retirement with large dividends. Think it would be nice to have a position in bonds and what happens when fed starts cutting rate in a few months.

[@wilma6235]

Thanks for the video. What is an example of a TIPs find at Fidelity?

[@fender8885]

Great video as always! So if I wait until April to buy I-bonds what would you recommend I do with my money until then? 3 month short term CD, high yield savings, or something else?

[@DocSardo]

If you live in a state with high state taxes and are buying in a taxable account, then 13-week T-bills may be a good choice. If you live in a state with little or no state taxes, or are buying in a deferred tax account, then a 3-month brokered CD may be a good choice as they have a slightly better rate than the T-bills. Alternatively, there are currently some bank accounts that are offering a decent rate, and the cash will remain liquid, but you will need to shop around.

[@nicholasmartinez6043]

My plan is to keep my cash in a money market yielding 4.5 percent or so until at least April or May. At that point if the IBOND rate yield is higher than that in the following 6 months from that point then I will use some of my cash to buy

[@rodneyrchicago]

Isn't there an advantage to buy early just to be in the ibond market and allow the $$ to compound starting this month?

[@jroysdon]

The amount of a few months is negligible. One reason to do it sooner might be to get the 1-year clock ticking sooner.

[@susanshort6150]

If an Ibond is purchased in January, is the 6.89% applied to the life of the bond or does the rate change every 6 months?

[@hanwagu9967]

i bond purchased in the Nov '22-Apr '23 earn annualized 6.89% for 6 months. The rate adjusts every 6 months due to inflation rate reset every 6 months. However, since Nov'22-Apr'23 have a fixed rate base rate of .40%, those i bonds will forever get at least .40% plus whatever the inflation rate is plus the fixed-inflation composite index. If you buy i bond this month, Jan '23, you will earn 6.89% annualized from 1/23-6/23. Your rate will adjust for 7/23-12/23 based on the inflation rate set May '23. Then 1/24-6/24 rate will be based on inflation rate set Nov '23...and so on and so on until final maturity after 30yrs or until you cash out. I bonds will not go negative, but during deflationary periods you would not earn anything during the deflationary period, even if you have a fixed rate component.

[@MARTINA-gc3tq]

I bonds will divert funds from the retail investments in the equity markets which will increase the risk of a market crash.

[@leemiller358]

Can you recommend how best to capture ibonds in a financial software? I would expect it to track the updated rates and how long one has held it. I use Right Capital, but have not seen a specific entry.

[@PeaceLoveJoy2]

If you buy a bond fund as you recommend as apposée to bonds direct & individually, doesn’t that incur state taxes ( which straight treasury bonds don’t)?

[@tdubman]

That completely depends on the fund and the types of underlying bonds that it owns. You can buy treasury, municipal, or corporate bond funds (or a fund could own a combination of these). If you buy a muni bond fund that only owns funds from your state, then there are no federal or state taxes. Those state-specific ones are hard to find unless you live in some specific states, though.

[@y2k163]

Just wondering if anyone knows how often iBond pays interest. I have deposited money to my account since April 2022. I have not seen interest payment yet.

[@hanwagu9967]

your main dashboard on myaccount tab doesn't show interest. You have to click on SAVINGS BONDS link, and it will show Series I Savings Bond Amount and Current Value or choose the Current Holdings Tab.

[@justtryingtolearnsomething111]

If you buy a Ibond in 2022, can I another bond in 2023?

[@rob_berger]

Yes.

[@justtryingtolearnsomething111]

Thanks

[@MaxGrey03]

The answer is Yes as Rob stated, but to be very technical, you can purchase up to $10,000 of I Bonds in the calendar year. That amount can be divided up however you wish over the full year. The minimum single purchase being $25.

[@mentemillonariatips]

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