0:00 I Bonds Explained! (Is 9.62% Guaranteed for Real?) 0:36 - What are I Bonds? 1:20 - What is the interest rate on I Bonds? 3:13 - Loophole: How to buy I bonds above the $10,000 limit 4:59 - How to buy I Bonds correctly
Some additional tricks with I-Bonds. This assumes you've already created an account with Treasury Direct, which may take a day or two to get up and running. Purchase the bond around the end of the month. Between the 25th and 27th. You get the full month's interest even though you purchased near the end of the month. It can take a one to three days for the purchase to clear so don't do it too close to the end of the month. Redeem the bond on the first of the month. You get the full month's interest even though you redeemed it on the first day. If you do this that three month penalty is really only two months.
Thanks! Your article "I Bonds Explained!" clarified/answered a question no other articles addressed. Why my April investment was still at 7.12% and not the renewed rate from May. After a bunch of research, I deduced what you explained but still wasn't certain. Your scenarios section explained it quick and simple!
Nice tips. If I cash out after 1 year, it seems I will lose 3 months of interest. So, if I cash out right after 12 months, I will lose interest from 10, 11, 12 months correct ?
What TD will show you: (USING A SCENARIO WHERE YOU PURCHASED 11-01-2021 I-BONDS) I-BOND: 11-01-2021 Accumulated interest shown (less the 3-month penalty) ANY DAY IN A GIVEN MONTH YOU VIEW ACCUMULATED INTEREST IN YOUR ACCOUNT: 12-2021 $0 01-2022 $0 02-2022 $0 03-2022 interest from November 04-2022 Nov+Dec 05-2022 Nov+Dec+Jan 06-2022 Nov+Dec+Jan+Feb 07-2022 Nov+Dec+Jan+Feb+Mar 08-2022 Nov+Dec+Jan+Feb+Mar+Apr 09-2022 Nov+Dec+Jan+Feb+Mar+Apr+May 10-2022 Nov+Dec+Jan+Feb+Mar+Apr+May+Jun STARTING NEXT MONTH YOU CAN REDEEM YOUR I-BOND and GET: MONTH OF REDEMPTION: 11-2022 Nov+Dec+Jan+Feb+Mar+Apr+May+Jun+Jul 12-2022 Nov+Dec+Jan+Feb+Mar+Apr+May+Jun+Jul+Aug 01-2023 Nov+Dec+Jan+Feb+Mar+Apr+May+Jun+Jul+Aug+Sep 02-2023 Nov+Dec+Jan+Feb+Mar+Apr+May+Jun+Jul+Aug+Sep+Oct Get it? Since during the month that you would REDEEM the I-Bond you would get ZERO INTEREST for that ENTIRE MONTH!! The 3-month penalty applies to the PRIOR 3 FULL MONTHS you held the I-Bond. That's why many are suggesting that when you redeem I-BONDS you should redeem them very early of any given month. You will ONLY GET the full 12 months of interest payments when you REDEEM DURING ANY DAY IN FEBRUARY 2023.... No more, no less. So why would anyone EVER redeem their I-bonds on any date late in a month? Give the Feds free use of your money for an additional month?
Can you cover the math you are using with the current 9.62% rate and hypothetical 6% rate and the 5.86% net interest rate after a year if you withdrew and forfeit the last 3 months of interest (presumably at the 6% rate)?
This math doesnt make sense to me either. I'm getting a net interest rate of 6.3%. And also why are you assuming people will cash out after a year? I imagine people will only cash out early if the interest rate falls at which point it's less of a penalty
Thanks for the video!!! It is very helpful. When I check the TD web, it does not specify how much I can buy ibond as a gift to someone. It only mentions I can only gift $10,000 to someone each year. Does it mean I can buy, for example $50,000 ibond to my wife as a gift this year and deliver to her $10,000 per year for the next 5 years?
No, you would have to buy a $10k bond every calendar year assuming she already has a TreasuryDirect account. She can then leave them there in her account and in 6 years withdraw $50k and pay the federal taxes on it.
Although you can't cash out for 12 months, is the rate an annual rate or a 6 month rate? If you invest in Sept, will you get the announced rate for 12 months even though the Feds will adjust the rate Nov 1?
If I gift for my child is there an age limit? And if I gift to my child does that go into and included in the total she purchased? She purchased $10,000 on her own. Can I still gift? Or has the limit been reached
Here's a helpful video explaining how you can calculate the inflation number a month ahead of the official government announcement: ruclips.net/video/jkpTlGmQ9go/видео.html&ab_channel=TripOfALifestyle
Great videos! Can you comment on how easy it is to "sell" or "redeem" the I-bond, after the 1 year period? Can I do it through the treasury direct website and transfer to my linked checking account? Or do I need to go through a broker, bank or middleman?
Electronic bonds get to your checking account in 2-3 days. If you are uploading paper bonds, that can take weeks or months to get the money into your checking account.
Treasury Direct is so overwhelmed with investors setting up "I" accounts that response time by email is virtually impossible, telephone contact is so limited that an investor calling at 11:00am is told 'call some other time". In other words, take information as Treasury wants to issue it...or don't bother. Of course, one could set up an account with a financial planner.
The I bond interest rate is 9.62% until October. Let’s say I buy $10,000 worth of I bonds with the 9.62% interest rate before October, let’s just say I buy it on September 25th 2022. While I get the 9.62 interest rate for 6 months after september 25? The interest rate will then be recalculated on March 25th 2023 right?
If you purchase on sep 25th, you actually get 9.62% interest from Sep 1st for 6 months, interest calculation starts from beginning of the month irrespective of when you buy in the month.
Great video. I have a question about the purchasing limit. I know it's 10K limit per person. I file taxes with my wife as married filing jointly. So does the limit 10K applies combined for both? Or each of us can buy 10K individually regardless of filing status?
if my spouse account got locked and it requires form 5444, can I buy her I bond as gift? If so, would it accrue the same rate through next 6 months and then what ever the rate it in November of 2022? you mentioned something about the rate be lower after 2024, can you please explain this? thanks
Hi would anyone know.. just wondering if monies had to be taken out from a retirement account cuz of taxes I don’t think it would be profitable . I would think . Thanks
THANKS, But what is the fixed rate, I have seen it reported as 4.81% which if true isn't a bad rate if the inflation drops to zero and under this administration I do not see that there is even a remote chance of that happening
Who is responsible for the tax on the gift ibonds? If I purchase gift ibonds and give to my spouse in 2023, do we have to report the interest when filing 2023 tax return even without redemption?
www.treasurydirect.gov/indiv/help/TDHelp/howdoi.htm The recipient is responsible for the Tax on I-bonds. WHEN YOU SET UP YOUR TD account you HAD TO CHOOSE/SELECT either to PAY YEARLY on your I-Bond interest, or to DEFER YOUR TAXES until the I-Bonds are redeemed. Usually most people CHOOSE/SELECT to PAY the tax when you redeem the bond.
Yep! Wife and I maxed out. Now as for the tax return loophole, we always seem to get a nice tax refund, so in 2023 we'll do that if inflation is still raging. That 3 month interest penalty... thats the LAST 3 months, so if inflation dies out the loss won't be that bad if we want to invest elsewhere.
I put in a request for the purchase of an iBond one month ago, and received a (false) reply a day later confirming the purchase. But looking into my TreasuryDirect account, there was no purchase; looking into my bank account showed no withdrawal. After inquiring by e-mail, I was lectured: “...we will respond only to questions satisfying the following two criteria” both of which were met previously. After waiting for another two weeks, I called and was given the message that “it could take up to 8 weeks to process” - not one day as told by theoretical experts here on RUclips. How long is the wait for a human to answer my phone call? “We are experiencing a traffic heavier than usual... your call will be answered in about 2 hours”. Don’t know if others are met with the same experience.
Did you but directly through Treasurydirect? If not it could have been something fishy. I bought just $50 yesterday and got an email right away and see the bond purchased today
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0:00 I Bonds Explained! (Is 9.62% Guaranteed for Real?)
0:36 - What are I Bonds?
1:20 - What is the interest rate on I Bonds?
3:13 - Loophole: How to buy I bonds above the $10,000 limit
4:59 - How to buy I Bonds correctly
Some additional tricks with I-Bonds. This assumes you've already created an account with Treasury Direct, which may take a day or two to get up and running. Purchase the bond around the end of the month. Between the 25th and 27th. You get the full month's interest even though you purchased near the end of the month. It can take a one to three days for the purchase to clear so don't do it too close to the end of the month. Redeem the bond on the first of the month. You get the full month's interest even though you redeemed it on the first day. If you do this that three month penalty is really only two months.
How is giving a gift considered a loophole if this still counts towards the $10K limit per year?
You explained that way better than everyone else!!! I am buying myself a 10k I-bond.
Thank you very much Ryan. I am glad you found the video useful. Have a great day!
Thanks! Your article "I Bonds Explained!" clarified/answered a question no other articles addressed. Why my April investment was still at 7.12% and not the renewed rate from May. After a bunch of research, I deduced what you explained but still wasn't certain. Your scenarios section explained it quick and simple!
I am glad that you found my video useful. Have a great day!
Nice tips. If I cash out after 1 year, it seems I will lose 3 months of interest. So, if I cash out right after 12 months, I will lose interest from 10, 11, 12 months correct ?
Treasury Direct doesn't say that specifically, but that's how we understand it too.
What TD will show you: (USING A SCENARIO WHERE YOU PURCHASED 11-01-2021 I-BONDS)
I-BOND: 11-01-2021 Accumulated interest shown (less the 3-month penalty)
ANY DAY IN A GIVEN
MONTH YOU
VIEW ACCUMULATED
INTEREST IN YOUR
ACCOUNT:
12-2021 $0
01-2022 $0
02-2022 $0
03-2022 interest from November
04-2022 Nov+Dec
05-2022 Nov+Dec+Jan
06-2022 Nov+Dec+Jan+Feb
07-2022 Nov+Dec+Jan+Feb+Mar
08-2022 Nov+Dec+Jan+Feb+Mar+Apr
09-2022 Nov+Dec+Jan+Feb+Mar+Apr+May
10-2022 Nov+Dec+Jan+Feb+Mar+Apr+May+Jun
STARTING NEXT MONTH YOU CAN REDEEM YOUR I-BOND and GET:
MONTH OF
REDEMPTION:
11-2022 Nov+Dec+Jan+Feb+Mar+Apr+May+Jun+Jul
12-2022 Nov+Dec+Jan+Feb+Mar+Apr+May+Jun+Jul+Aug
01-2023 Nov+Dec+Jan+Feb+Mar+Apr+May+Jun+Jul+Aug+Sep
02-2023 Nov+Dec+Jan+Feb+Mar+Apr+May+Jun+Jul+Aug+Sep+Oct
Get it?
Since during the month that you would REDEEM the I-Bond you would get ZERO INTEREST for that ENTIRE MONTH!! The 3-month penalty applies to the PRIOR 3 FULL MONTHS you held the I-Bond. That's why many are suggesting that when you redeem I-BONDS you should redeem them very early of any given month.
You will ONLY GET the full 12 months of interest payments when you REDEEM DURING ANY DAY IN FEBRUARY 2023.... No more, no less. So why would anyone EVER redeem their I-bonds on any date late in a month? Give the Feds free use of your money for an additional month?
Why does it take months for the I Bond to start earning interest? If you buy one today, the next accrual is in May?
If I buy a I Bone in October 2022 for 10k can I then buy another 10k in January 2023?
Yes, that is correct. It's $10k per calendar year. Thanks!
Can you cover the math you are using with the current 9.62% rate and hypothetical 6% rate and the 5.86% net interest rate after a year if you withdrew and forfeit the last 3 months of interest (presumably at the 6% rate)?
This math doesnt make sense to me either. I'm getting a net interest rate of 6.3%. And also why are you assuming people will cash out after a year? I imagine people will only cash out early if the interest rate falls at which point it's less of a penalty
If I buy it today 10/25 does it lock the 9% or is it too late?
Apologies for the late reply. You had until 10/28 to lock in the 9.62% rate. The new I Bonds rate is 6.89%. Thanks!
Thanks for the video!!! It is very helpful. When I check the TD web, it does not specify how much I can buy ibond as a gift to someone. It only mentions I can only gift $10,000 to someone each year. Does it mean I can buy, for example $50,000 ibond to my wife as a gift this year and deliver to her $10,000 per year for the next 5 years?
No, you would have to buy a $10k bond every calendar year assuming she already has a TreasuryDirect account. She can then leave them there in her account and in 6 years withdraw $50k and pay the federal taxes on it.
Although you can't cash out for 12 months, is the rate an annual rate or a 6 month rate? If you invest in Sept, will you get the announced rate for 12 months even though the Feds will adjust the rate Nov 1?
If I gift for my child is there an age limit? And if I gift to my child does that go into and included in the total she purchased? She purchased $10,000 on her own. Can I still gift? Or has the limit been reached
The limit was reached.
Considering that inflation is calculated in May. Do you have to buy before May? or right now is it still a good time to buy?
Right now is still a great time to purchase. You can buy I bonds at the 9.62% rate until October 2022. Thanks!
Here's a helpful video explaining how you can calculate the inflation number a month ahead of the official government announcement: ruclips.net/video/jkpTlGmQ9go/видео.html&ab_channel=TripOfALifestyle
What date will the interest be announced by the Treasury for the November I bonds?
It will be announced on the first business day in November. Thanks!
Great videos! Can you comment on how easy it is to "sell" or "redeem" the I-bond, after the 1 year period? Can I do it through the treasury direct website and transfer to my linked checking account? Or do I need to go through a broker, bank or middleman?
Yes, you do it through the treasury direct website and transfer it to your linked account, in this case your checking account.
Electronic bonds get to your checking account in 2-3 days. If you are uploading paper bonds, that can take weeks or months to get the money into your checking account.
Treasury Direct is so overwhelmed with investors setting up "I" accounts that response time by email is virtually impossible, telephone contact is so limited that an investor calling at 11:00am is told 'call some other time". In other words, take information as Treasury wants to issue it...or don't bother.
Of course, one could set up an account with a financial planner.
The I bond interest rate is 9.62% until October. Let’s say I buy $10,000 worth of I bonds with the 9.62% interest rate before October, let’s just say I buy it on September 25th 2022. While I get the 9.62 interest rate for 6 months after september 25? The interest rate will then be recalculated on March 25th 2023 right?
If you purchase on sep 25th, you actually get 9.62% interest from Sep 1st for 6 months, interest calculation starts from beginning of the month irrespective of when you buy in the month.
Great video. I have a question about the purchasing limit. I know it's 10K limit per person. I file taxes with my wife as married filing jointly. So does the limit 10K applies combined for both? Or each of us can buy 10K individually regardless of filing status?
Each of you can buy individually. Each of you need your own separate TreasuryDirect account set up online. Separate logons separate passwords.
if my spouse account got locked and it requires form 5444, can I buy her I bond as gift? If so, would it accrue the same rate through next 6 months and then what ever the rate it in November of 2022? you mentioned something about the rate be lower after 2024, can you please explain this? thanks
Question: if my child buys $10k, can I still buy them $10k in the same calendar year? Or is it treated like a gift?
A child can’t have their own account if they are under 18.
Can you buy more than what you get in your return. If my refund is 2500 is there a way to add to get to 5000
Unfortunately no. The additional I Bonds that you can purchase with your tax refund must be the same or less than your refund.
Hi would anyone know.. just wondering if monies had to be taken out from a retirement account cuz of taxes I don’t think it would be profitable . I would think .
Thanks
As the saying goes, "nothing good last forever". I'm glad I got in when the getting was good. LOL
Thank you for this very helpful video!
I am glad that you found this video useful. Have a great day!
THANKS, But what is the fixed rate, I have seen it reported as 4.81% which if true isn't a bad rate if the inflation drops to zero and under this administration I do not see that there is even a remote chance of that happening
0%
@@ZCAR355 Thanks I was wrong-(again)
@@steventrostle1825 4.81% is the semiannual inflation rate.
Who is responsible for the tax on the gift ibonds? If I purchase gift ibonds and give to my spouse in 2023, do we have to report the interest when filing 2023 tax return even without redemption?
www.treasurydirect.gov/indiv/help/TDHelp/howdoi.htm
The recipient is responsible for the Tax on I-bonds.
WHEN YOU SET UP YOUR TD account you HAD TO CHOOSE/SELECT either to PAY YEARLY on your I-Bond interest, or to DEFER YOUR TAXES until the I-Bonds are redeemed. Usually most people CHOOSE/SELECT to PAY the tax when you redeem the bond.
I believe it’s the person who you gifted it to
You aren’t required to pay the tax on bonds you haven’t redeemed yet.
Have you purchased I Bonds this year?
Yep! Wife and I maxed out. Now as for the tax return loophole, we always seem to get a nice tax refund, so in 2023 we'll do that if inflation is still raging. That 3 month interest penalty... thats the LAST 3 months, so if inflation dies out the loss won't be that bad if we want to invest elsewhere.
Just this week
Yes.
Fantastic
Thank you! Cheers!
I put in a request for the purchase of an iBond one month ago, and received a (false) reply a day later confirming the purchase. But looking into my TreasuryDirect account, there was no purchase; looking into my bank account showed no withdrawal. After inquiring by e-mail, I was lectured: “...we will respond only to questions satisfying the following two criteria” both of which were met previously. After waiting for another two weeks, I called and was given the message that “it could take up to 8 weeks to process” - not one day as told by theoretical experts here on RUclips. How long is the wait for a human to answer my phone call? “We are experiencing a traffic heavier than usual... your call will be answered in about 2 hours”.
Don’t know if others are met with the same experience.
Did you but directly through Treasurydirect? If not it could have been something fishy. I bought just $50 yesterday and got an email right away and see the bond purchased today
What are the two criteria?