I Bonds Explained: What are Series I Savings Bonds?
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- Опубликовано: 6 окт 2024
- Today I talk about Series I Savings Bonds or I Bonds for short. In this video, I explain what they are, why you might consider them as a hedge against inflation, and explain some of the pros and cons of them. I also share information on the annual minimum and maximum investments you can make and where to buy series I bonds while you consider different inflation investing strategies. If you find yourself asking, "should I invest in I bonds in 2022?"....then this video is for you!
For more information on I Bonds: www.treasurydi...
For an alternative to I Bonds, check out my video on Treasury Inflation Protected Securities (TIPS): • TIPS Bonds Explained |...
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DISCLAIMER: MY VIDEOS ARE FOR EDUCATIONAL PURPOSES ONLY AND I AM ONLY SHARING MY PERSONAL OPINION. I AM NOT A FINANCIAL ADVISOR, THEREFORE, ANY INFORMATION PRESENTED SHOULD BE VIEWED AS HAVING AN EDUCATIONAL PURPOSE ONLY AND NOT AS FINANCIAL ADVICE. WHEN MAKING ANY FINANCIAL-RELATED DECISIONS, PLEASE DO YOUR OWN RESEARCH AND/OR CONSULT WITH A PROFESSIONAL THAT CAN PROVIDE YOU PERSONALIZED GUIDANCE.
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Thanks so much for watching---please LIKE, SUBSCRIBE and SHARE! Are YOU considering I bonds or another strategy as a hedge against inflation?
I wasnt financial free until my 40’s and I’m still in my 40’s, bought my second house already, earn on a monthly through passive income and got 4 out of 5 goals, just hope it encourages someone that it doesn’t matter if you don’t have any of them right now, you can start TODAY regardless your age INVEST and change your future! Investing is a grand choice I made. Great video! Thanks for sharing!
Very inspiring! I love this💜
Glad I came across this comment section. I was struggling to decide what to do with a good amount of money in the bank doing nothing. I would be happy if you could advise me, as I am ready to go the passive income path...
@@eadad4371 Generally, investing requires higher knowledge. For this reason, It's important to have a solid support structure (financial consultant) to guide you through especially in asset picking. I operate with (Regina Louise Collaro) an investment advisor who partners with a licensed wealth management firm. For the record, the experience has been the best for my finance.She is quite popular for her services so you might have heard of her.
She made me financially stable investing through her help, now I earn on a monthly basis through her passive income strategy...So I’ll advise you do get a good Investment advisor for yourself
@@davidforesto That’s great , your investment advisor must be really good,I have seen testimonies of people using the help of investment advisors in making them more financial stable. Do you mind sharing more info on this person?
@@eadad4371 I have had the intentions of starting investing. But I always thought it was late and I think I need to stop procrastinating. I will definitely 🔍 Regina Louise Collaro and see what she can advise .Thanks a lot . This was of so much help to me .
I just started putting 10K a year in I bonds. Great performers and super easy to forget about. Thank you!!
Same here times 4 people. 40k a year.
Totally agree! Thanks for the taking the time to share your comments!
@@superairski1782 Nice! 👍
If you have the available funds you can buy another 10k in the name of a trust. This helps a lot! So hubby and I are putting in a total of 40k per year. Never thought savings bonds would interest but holy moly, the interest rates are irresistable.
Great performers? They are great for cash needs but their performance is guaranteed to lose to inflation. When you cash in your I Bonds you have to pay tax guaranteeing you will lose to inflation.
The idea of an investment is to beat inflation. But again they're great for cash savings but their performance will almost guaranteed to be under inflation
Kevin, Sir, you nailed that presentation. Until today, I did not understand how the I Bonds were structured. I took notes and have a much better understanding of them now. I am glad I saw this video and I will recommend this video to the masses once I get my you tube channel up and running. (STAMPEDE DAY TRADERS) I Definitely have learned something today. This will be a very good option for longer term investments in comparison to day trading. I LOVE IT. Mike in Ohio.
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.
Thank you for sharing these great tips! I'm new to I bonds myself, bought my first in April in order to get the current rate at the time (7.12%) for the first 6 months and then the new (9.62%) rate for the next 6 months to know the rate I would get over the whole 12 months I would to have hold the bond...I wanted to put this video together before the end of April but just didn't have the time to get to it. I'm definitely keeping in mind what you shared for when I cash it in. Thanks again for the great info!
@@HealthyWealthyandWise You're welcome.
I purchased iBonds 4 months ago and still don't see any interest showing. At what point will I see the interest I made displayed in my account?
@@kokalti Great question...every 6 months the compounded interest will be added to the principle. It is accruing now, you just won't see it until the 6 month mark.
@@HealthyWealthyandWise Thanks. I was already starting to worry
When in the military, I purchased I savings bonds thru monthly allotment. I had forgotten about them and really thought they were EE's so was going to cash them in for I Bonds. So Good Surprise when I found out they were I bonds. Today, I entered all my savings bonds into the savings bond calculator. There is Different interest rates being shown. They are Not all earning the current interest rate. Some are as low as 7.12% purchased 7/8/9 2008 and then one is at 11.09% purchased 12/2006. Most are showing interest at 8.16% and 8.26%. I am not understanding the difference. Thank you for your explanation of the savings bonds. I will delve more into it. I really never knew savings bonds were so different.
Thanks for sharing...nice surprise indeed! That rates could be different for 2 main reasons..1. the month/timing you bought them if not bought in May or November (remember the 6 month lag addressed the video) and, 2. in those years that you bought them, the fixed portion of the rate could've been more than the 0% than they are now.
www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_iratesandterms.htm (Historical Rates)
www.treasurydirect.gov/indiv/research/indepth/ibonds/IBondRateChart.pdf
Looking at the Tables and the Chart, You find the FIXED RATE that NEVER CHANGES for the bonds you own.
The TD formula of the FIXED RATE and ANNUALIZED INFLATION RATE gets your COMPOSITE RATE. This rate changes every 6 months AFTER the anniversary of YOUR OWN Bond, so yes, it's a lagging indicator.
If you add the two together your COMPOSITE RATE you see doesn't "add" up. ;-) (rolling eyes)
I just took out around 10K out of the stock market and bought 10K in I-Bonds that will be getting a rate of 9.62% November. It most likely will drop a few points but its still better than parking it in the stock market right now.. I would rather be safe than sorry in times like this with the stock going up and down.. With the feds raising the rates its the best place to park some extra money for a year until we see what the market does// Even if it dropped to 5% you still cant get that return anywhere.
Thanks for sharing--with the market rocky with more Fed tightening to come, it's hard to beat this current guaranteed rate of return for sure.
definately plan to buy for my wife and my self @ 10,000 each. Good info video. Thanks
Thanks for sharing...and I appreciate you taking the time to comment!
We are totally in on I Bonds. We are buying 2 10k bonds each per year (one as individual and one each in trusts). Wish In
could put all our money in these.
Thanks for sharing!
Vickie you should consider the GIFT BOX feature of your TreasuryDirect account. There are many well-informed RUclips videos about how to gift I-bonds to your spouse thus increasing the amount of I-bonds you can purchase in any given year. My wife and I have done it for each other for a total of $60,000 in I-bond purchase(s) this year.
@@wallace_n_gromit3180 Always love when everyone shares info. with each other!
Can also do trust and biz entities 30k total per year per person
Subscribed! This told me all I needed to know about I-bonds. I have cash just sitting in checking/MM accounts, twiddling their thumbs. I'm going to seriously consider these. Thanks for the vid.
A well explained video, videos like this and insight from an expert really helps.
Well said, couldn't agree more, their insight goes a long way, that's why I am now being coached by one, Edwin Earl.
@@finntomkins6825 hello finn, can you kindly link me to one? i have seen some of the benefits and i would also like some assistance.
INVESTWITHEARL
on telegram
From an expert ??? Are you kidding me, he's just a youtuber making these videos at home.
Along with TIPS, I was buying them five to ten years ago when I was making way more than I could spend. My friends were laughing at me for hedging against inflation. Now I am involuntarily semi-retired and using them to round out my income while delaying SSI.
Disability ended my investing as well as ate up much of it to make accommodations. But what i planned on..
So this is essentially a drip? Twice a year. Good thing. Your video is much better than the other guy who's tooting I bonds like it's a no-brainer. Thank you.
Great information. I'm planning on buying 10K for myself and 10K for my wife.
Nice! Thanks for sharing 😊
Glad I found your channel. I’m in my early 30s and this still seems like a great advice. Glad I found your channel. I was wondering on the math, I’ll do this in excel and share:
If the bond pays 9.62% per year, but Post 1 year if you cash out, you forfeit the last 3 months of interest. (This only applies till 5 years)
What’s the effective %interest paid p.a., in cash out year 1, year 2, year 3 etc.
Thank you! In your scenario...at least for the first year and then cash out, the % would ~ 6.1%.
Thanks for the informative video. You mentioned it's 9.62% per month but isn't it an annual rate i.e. you earn 9.62% per year so you would earn 962$ if you invested 10,000$ over the span of one year and not 962$ per month?
Thank you for giving me the opportunity to clarify if I misspoke in the video... you are correct, in your scenario, you would earn $962 for the entire year, not per month (actually, with the interest compounded at the 6 month mark, it would be about $985 for the year)
So let me get this straight it’s $985 for the year 1 time or each month please explain
Thanks. I didn’t know about the trust criteria. $40k it is!!
Excellent presentation. I think we can put our emergency funds in an I Bond regarding the 12 month probationary withdrawal period.
Putting your emergency fund in something that ties it up for 12 months isn’t a good idea and is contrary to the concept of an emergency fund. An ‘emergency’ by definition is an unanticipated expense that you must layout immediately.
Question Assume that inflation goes to zero, then I Bonds would be paying zero interest since the base rate is zero.? I have never seen this mentioned... if you want to buy the max using your refund you can make an estimated payment or have Fed tax with held from a distribution you are going to receive. to increase your with holding .It goes with out saying that you want to time the deposit so it does not sit in your account for a long period of time.So if you have an extension for 2021 you could make an estimated payment now and buy I bonds when you file your return.
To your first question, you are correct. If the rate of inflation goes to 0% or even negative (deflation), you would not be earning anything...but even with deflation, you don't lose money. To your point on the tax refund, it's an interesting thought but it's probably not something I would do personally because you're really getting into speculation and timing and I'm not sure there's never enough upside on an I bond to add that type of risk.
Now that the new rates are out I hope you do another video about the new rates. Loved this one. Made it so easy to understand!
Great info, thanks. My husband & I just recently learned about I-Bonds. We bought some yesterday.
Thank you so much! Appreciate you sharing your thoughts and experiences here 😊
I already bought 10,000 in i bonds recently.
Thanks for sharing...got mine, too!
My advice when something like this comes out is to google for the term and "problems" and "angry". In this case, that will bring up a video from a guy who has owned them for years and he's critical of them. His main point is that they can drop to a zero return when the base rate is 0.0%. They also have a penalty for selling early.
Also the reporting tools on the government site are very weak for these bonds. It's hard to track your ownership and potential earnings.
But this advice applies to *anything*. New TV's. New products. Companies specifically great false positive buzz around products and services. You need to find feedback from people who had bad experiences- see if there are too many of them- and how bad it can get.
My advice as a guy who retired at 51 and is now about to start social security.
These bonds *do* have value as a savings vehicle of purchasing power. But they have some significant risks when we have a recession or when the government crushes inflation.
Clearly many analysts and economists were wrong about May 2020 being the peak of inflation. What is rate if you buy now- February 2023.
I don’t understand. If inflation drops to 0. I still would get 4.8%. Why is that. Thanks for your help
Despite the economic downturn, I'm having the best time of my life financially. Earning over $83k in the last 2months with an investment of $19,000. Money can be made even in a bear market. Make the most of it.
@Pedro Sean It's by simply investing in the stöcks and Cryptó market,with the help of my advisor.
@Pedro Sean Personally,i trade with Rebecca.F.Cassar . Her services are exceptional and her returns are great
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Nice overview. I invested last year and also invested again this year. Great way to earn more interest vs. bank rates. Based on my experience I think you really summed things up well. Nice job!
Thanks Mike! I really appreciate the feedback and glad to hear you share your positive experiences for others to see.
I shared your video with a friend whom I was just telling about I Bonds earlier this week.
@@mikedunn1638 I'm humbled to hear that, thank you! This video has really done well so I ended making a video this past week comparing my own experiences with TIPS and I bonds as others might find that helpful.
Have you done one on adding beneficiaries? I’ve done that but quite frankly am still not sure if I’ve done it correctly. That would be a good one to add.
I assume if you belong to a mutual fund that it invests in Ibonds.
Thanks for the info. Im 28 and have been a saver since I was 18. I wish I had an interest in investing sooner
Financial Education is so important. Thank you for the videos.
Totally agree! Thank you so much for taking the time to comment 🙂
What investment "vehicle" actually supersedes inflation year in & year out no matter the inflation rate; otherwise you're just failing by falling behind?
Great video...similified and very articulate....
Great explanation of how & when the interest is calculated on these I bonds, which always seems to be lacking in other videos and articles hyping them. Thanks!
Thank you so much for this! I appreciate the feedback--I always approach making my videos as determining what I would want to learn from them. Maybe not as flashy as others, but hopefully more educational without feeling like someone is trying to sell you on something.
Annual contribution to I bonds means that you can invest another $10000 after holding for a year, or it starts on January 1?
Sorry for the delay in my response...been very busy as of late. To answer your very good question, it's based on the calendar year....you could literally buy $10,000 in Dec. 2022 and another $10,000 in Jan. 2023
@@HealthyWealthyandWise , thank you so much!
@@marinazats1352 You are very welcome!
As I understand it, I can buy *paper* I bonds using my federal tax refund. If I do so and have that piece of paper in my hand, can I give that bond to a child or grandchild to cash in in 20 years, or is that bond linked only to me?
I wish I knew about I bonds earlier.
I’m considering bonds.
Thanks for sharing; I had never been a bond investor, but I did buy an I bond for the first time based on the rates and current economic environment
@HealthyWealthyandWise are there any specific lawyers for this kind of stuff???
Thank You!!!!!! Very Informative!!!!! 🙂
Thank you!!! I really appreciate you taking the time to comment 🙂
I had a theory about inflation. During inflationary periods the costs of goods go up. Almost all goods as a result. I see stocks as a product like many goods. As the price of things go up I imagine more money circulating in the economy. I know in some situations people earning more are saving less but as a whole, the same percentage of people who were investing before are investing now and since more money is circulating there is more demand on stocks. There by stock prices as a whole will eventually go up as a result of inflation. Eventually.
Thanks for sharing...there's a lot of complexity in it for sure! Mild inflation is considered positive and stock prices definitely rise over the long term in those situations.
Stocks will go up as inflation goes up because companies will charge more for their products and hence your profitability will go up percentage-wise in the long run (overall,all companies not one specific company)
When buying a gift I bond for a child (that will eventually be put into their Treasury account when they open it) can anyone suggest whether I should designate them Sole Owner or Primary Owner? Thanks in advance. Great video by the way!
Thank you! Not in this situation myself, however his link may be able to help you by looking the section on gifts for children: www.treasurydirect.gov/indiv/planning/plan_gifts.htm
Thank you for your informative video
Can J1 visa holder (with valid SSN) buy ibond?
Thank you! Not an expert on visas, but per TreasuryDirect, if you meet the following conditions, you should be able to buy an i bond:
If you have a Social Security Number and meet any one of these three conditions:
* United States citizen, whether you live in the U.S. or abroad
* United States resident
* Civilian employee of the United States, no matter where you live
After 12 months can I sell my bonds at the face value?.
Whom would I sell them to ?.
Thanks
What do you think they’ll go to in November?
Great video... You can only buy 1 10k bond a year?
How do you cash out of your I bond?
Per Treasury Direct: For electronic bonds, log in to TreasuryDirect and use the link for cashing securities in ManageDirect. For paper bonds, there are 2 options: 1.If you hold an account at a local bank and it cashes savings bonds, ask the bank if it will cash yours. The answer may depend on how long you've held an account there. If the bank will cash for you, find out what dollar limit, if any, it has on redemptions and what identification and other documents you need. 2. Send them to Treasury Retail Securities Services along with FS Form 1522 (download or order). You don't need to sign the bonds. You will have to validate your identity. FS Form 1522 tells how; see the "Certification" section of the form.
Very nice job. You explain things well and make them easy to understand.
Thank you so much! I really appreciate you taking the time to share your feedback with me.
whoa! where have you been? Great topic. I'm gonna do more research.
Thank you! I'm good, I've just been so busy with work and other things...trying to find a balance to be a little more consistent with putting videos out here and on my second channel....I'll get there! Thanks for sticking around for me 🙂
I've been thinking about moving some funds around to hedge better against inflation. This video helped. Great info. Thank you.
Thank you! I'm glad you found the video helpful!!
While hedging against inflation is a good thing in a portfolio in general. The problem is you're hedging against inflation after inflation has already raged high. You're more likely chasing returns.
I'm not saying don't hedge against inflation but I'm saying you better make it a long-term strategy and not change after the fact of something happening.
@@johngill2853 Good discussion John...I talk about this in my newer I bonds vs TIPS video.
@@HealthyWealthyandWise TIPS are way more complicated than I Bonds or regular bonds. Or at least I never studied them (I'm not in the stage of preserving money yet). I just don't believe in investing in something I don't understand completely. But I'd be definitely interested in watching your video and actually as I say I don't really understand them I may look for a book on them. (I'm getting close to the preservation stage and it's probably time to learn)
@@johngill2853 That's a great philosophy about not investing in things you don't understand well...that's why I've never jumped into crypto! What I've learned and do understand about it doesn't allow me to feel comfortable putting my money into it.
So, can I buy 2 $5,000 I bonds in one calendar year? Or 4 $2,500 I bonds in one calendar year?
Yep, you got it! You could also buy 400 $25 bonds, too, lol
I like to put a quarter of my emergency fund into a money market account and the rest of it into I bonds. That way I have enough liquid money to stand guard while I wait for the year to pass and access the bonds.
Thanks for the video. Can you clarify your statement @6:45 So the interest is 9.62 every month?
Thank you! Good question to give me the opportunity to clarify: 9.62% is the 'annualized' rate, therefore, you don't get that every month. Every six months from the bond's issue date, interest the bond earned in the six previous months is added to the bond's principal value, creating a new principal value. Interest is then earned on the new principal. So at 6 months your $1,000 bond would generate 4.81% interest (half of the annualized rate of the current 9.62% rate) or $48.10 and then be added to the principal. The next 6 months would then be paid at the updated inflation-adjusted annualized rate on the new principal, in this example which would be $1.048.10.
Can an individual put $10k in per year? As an example, putting in $10k on December 31st in one calendar year, and another $10k a few days later in early January of the following calendar year?
Yes, $10k per calendar year. There’s also some additional rules for buying bonds as gifts.
@@FreakyLynx That's correct 10k/calendar year...thanks for answering!
If I understand correctly. I bought one in April at 7.17% which will maintain for 6 months. And since May started at 9.6% I will get that starting in September for another 6 months? Correct?
Oct but yes on your question
You got the concept....you keep the current rate for 6 months then the new rate kicks in for the next 6 months.
@@jerrylance4932 Jerry...you the man! Thanks for helping others by answering so many of the questions!
Great video. Can we gift I bonds to friends and family
Thank you! You can....here is a link on how you can go about that: www.treasurydirect.gov/indiv/planning/plan_gifts.htm
If I put in $10000. And the rate stayed 9.62 for 18 months. Would It actually pay me 962 /month? Once that bond is cashed ?
You would get 15 months interest if cashed after 18 months. 1202.50+10,000=11,202.50
You would get $962 per year.
It's $80 per month.
And like the other comment said, you would only collect interest on 15 months.
You would lose the most recent 3 months of interest as a penalty for cashing the bond out before 5 years.
Great question and appreciate the others answering. It would be more due to the compounding on interest. But as mentioned, you would forfeit the last 3 months of interest. But IF the rate stayed that high, we're probably not pulling it out, right?!?
Do you know what bond for 5 years ? And its interest rate ?
Question -
If I buy $10,000 I Bond, can I sell it $1000 at a time ?
Great question...it depends if you bought electronically or if it's a paper bond. Paper bonds can't be split and must be cashed in full, whereas an electronic bond is more of an account where you can cash in less than the full bond amount such as in your scenario.
I heard in your talk the i bond pays x % interest per month. Did i hear correctly? Seems it would be annualized. It was about in the middle of your talk. Thanks for your great explanation
It pays interest semi annually. 6months after each purchase
@@jerrylance4932 Thanks Jerry
It pays out every 6 months...so when you don't see anything for those first few months, don't worry, it'll come. After the 6 month interest is posted, it will compound 6 months later.
invest $1000 @%9.62 after 6 months = 577.2, $1577.2. If the rate drops do you lose the profits of $577.2 or does it compound and just keep rolling over?
so if i put 1000 dollars in an i bond. i would be earning 96 dollars per month? or is this rate an APR?
Sure I bonds are great now, but that's because we are seeing record inflation. Inflation will go down probably in the next year or two so I'm wondering if it's still going to be a good investment when inflation rates drop back to normal levels.
if you start now you won't have to worry about 1-2 year if inflation decreases. you'll be beyond 1yr lock out and could cash in when rates decrease. can't believe people are chasing high yield savings at 1.5% but are questioning locking in i bond rates now because inflation may go down in a year or two. it's simply illogical.
Thanks for sharing your thoughts! What you say is true, but looking at the worse case scenario...if you buy a bond now at 9.62% annual rate, you're guaranteed that rate for 6 months. Even if the rate of inflation was to drop to 0% in the next adjustment (which isn't likely at all), then in the 1 year period you have to hold it, you would still earn 4.81% Now that's not great, but better than any lower risk types of investments (particularly in a year when the market is down ). And to your point, when deflation happens, you can redeem and move the money into another type of investment. I Bonds aren't the be-all, end-all like some people make them out to be, but this truly one of the few times they make sense to consider buying. I know I never considered buying them myself until this year.
Great explanation! Just opened my accounts thanks to your information
Thanks for the feedback ~ I'm glad you found the information helpful!
We are approaching the end of the long-term debt cycle. In my opinion in this phase, holding debt assets are super risky including bonds. There will be
definitely devaluation of currencies which cuts the
purchasing power of currencies. This defeats the
aim of investing (preserving purchasing power &
achieving growth)
I've spent the last few years cleaning house, getting rid of all debt. Now i need to get my investment mindset right, I want to start saving for my golden days. I need a sincere and honest advise on this
@@kashkat987 The economic hardship, inflation, recession, unemployment and the loss of job caused by covid pandemic is enough to push people into financial ventures. Be that one guy that keeps cool and uses a bear market to your advantage and capitalize long term, by compounding your investments today. Who cares if prices drop more. Know the value of what you own and stay the course. When you're pushing against the crowd and sticking to a disciplined strategy you're going to come out on top of the stack
@@MatthewVinson How can i take advantage of the bear market . I have always thought the stock & crypto market is a fool game just like going to the fair/carnival and trying to win a prize.
@@MatthewVinson Thanks i will make my research & also lookup your advisor on the web. I really appreciate the response, you have no clue how much it means
If the currency is devalued, then that's even more reason to own a bond that's hitched to inflation.
Would that be 10K per year or a liftetime cap of 10K ?
TIA
I bonds have an annual limit of $10k per each calendar year (not a lifetime cap)
Still watching Frank G Melbourne Australia 🇦🇺 ❤️
Thank you!
do you get interest on your interest?
It does compound every 6 months. So if you were to buy a $10,000 bond assuming that the rate stayed at 9.62% for 12 months, instead of earning $962, you would actually earn about $985
Just to make sure I understood, but you get 9.62% every month or just once at the end of the 6 months? if I invest 15,000 it would be 1443 gained each month or at the 6month? And at that 6 month, the money earned is compounded onto the new interest correct?
i have the same question
It's annualized rate that builds in your account
you are NOT paid an interest rate of 9.62% PER MONTH.
9.62% is an ANNUALIZED RATE (per year) which is updated every six months. So 9.62% is really over 6 months time only 4.81% .
On $15,000 you would get roughly $120 per month you owned the bond for the first 6 months.
This First months interest you would NOT SEE until the 1st day of the 5th MONTH. TD SHOWS you the interest you would receive if you redeemed(or could have redeemed) at any time that month you viewed the interest accumulated on your account less the 3-MONTH PENALTY.
When the interest rate resets after 6 months, yes, the interest you earned during the first 6 months is added to the $15,000 principal. So about $15,721
If you buy a July I-Bond (all are dated the same -- 07-01-2022) you could still buy them until the 26-27 of this month.
I-BOND: 07-01-2022 Accumulated interest shown (less the 3-month penalty)
ANY DAY IN A GIVEN
MONTH YOU
VIEW ACCUMULATED
INTEREST IN YOUR
ACCOUNT:
08-2022 $0 (less the 3-month penalty)
09-2022 $0 (less the 3-month penalty)
10-2022 $0 (less the 3-month penalty)
11-2022 interest from July 2022 $120
12-2022 Jul+Aug $240
01-2023 Jul+Aug+Sep $360 (6 Month Interest Rate Reset)
02-2023 Jul+Aug+Sep+Oct $481
03-2023 Jul+Aug+Sep+Oct+Nov $601
04-2023 Jul+Aug+Sep+Oct+Nov+Dec $721
05-2023 Jul+Aug+Sep+Oct+Nov+Dec+Jan
06-2023 Jul+Aug+Sep+Oct+Nov+Dec+Jan+Feb
(Those interest payments are approximated)
That's the annualized rate, so not every month. At the end of 6 months, you would take half the annualized rate (4.81%) and multiple it by the principle. The interest is compounded semiannually. Every six months from the bond's issue date, interest the bond earned in the six previous months is added to the bond's principal value, creating a new principal value. Interest is then earned on the new principal. So let's say the 9.62% rate stayed the same for 12 months (we don't know that, but just a hypothetical)...instead of just making $962 for that first year, with compounding you would make about $985. Hope this helps.
What's the website address to buy the I bonds from treasury website?
www.treasurydirect.gov/tdhome.htm
Excellent presentation regarding how iBonds work. Easy to understand. I do have one suggestion. You said there is a $10,000 dollar annual purchase limit for iBonds. Actually the $10K limit is based on your social security number and not on the number in your household. Which means, each person in your family with a social security number is eligible to purchase $10K of iBonds each. The caveat, each person must set up their own Treasury Direct account to fund the purchase. Hence a married couple could purchase $20K of iBonds annually, i.e $10K each person. A married couple with 2 children who each have there own social security number could purchase $40K of iBonds annually, i.e. $10K for each person. The children must have their own checking account. There may be an age restriction with your bank for the minor children. Best to check with you financial institution. Don't forget to check with a credit union too.
But it's true that I can buy ibond every year upto 10k right?
Yes, Sleepy_Rainy_Day's answer is absolutely correct
@Sleepy_Rainy_Day Thanks for helping out with your reply 👍
@Sleepy_Rainy_Day Yes, the refund is the way to do that! I wonder if anyone else came up with that strategy, lol
@Sleepy_Rainy_Day Interesting strategy...the issue will probably be that come the next tax filing season, the I bond rate will have a lower rate as the Fed raises rates to tamp down inflation.
@Sleepy_Rainy_Day All great points...definitely a great option for those who are older and don't want to deal with the risk of stocks. And right now it's hard to beat that guaranteed rate!
How much do they cost? It seems you need tons of money to invest in Ibonds.
Good question...you can start as low as $25 when buying them through TreasuryDirect.
Will Treasury Direct send out I -bond 1099-int annually or I won’t report tax until I redeem it? Thanks.
what happens if we have hyperinflation? Wouldn't silver and gold or possibly crypto be the best option
Yeah possibly, if you know anyone who can predict the future they could probably tell you which option is the best and then you could just put all your money into that. If you don’t know anyone who can predict the future then a diversified portfolio including some low risk, guaranteed growth options like bonds serve a purpose as part of your portfolio.
Watching your video from India, can we as Indian invest in such instruments
That's a great question; I don't believe you can directly invest in I bonds because a US social security number is required. Other types of investments (such as TIPS) may be available through ETFs through a broker licensed for the US markets
Great content. Scenario question - Let's say you spend $1000 today on an I-Bond, can you spend another $1000 in a few months to increase that same bond or do you have to then purchase another bond at that point?
It’s all electronic so your balance increases in that scenario. But when cashing in later, the 1year holding period will be different for the two buy periods. Also the six month period when the interest rate changes will be 1 month different
@@jerrylance4932 thank you for the insight.
@@davidosorio4249 Great question David...I see Jerry already gave you the answer!
This is an important concept to understand. You do take advantage of compound interest with an I bond BUT it is not cumulative of all your bonds added together. If you have 20, $100 I bonds the interest is paid on each $100 bond. Then, future interest is calculated on the new value of each individual bond. You are compounding but it’s occurring separately and slower. Unlike contributing to a mutual fund where you are constantly increasing the principle, thereby increasing dividends (which u shud reinvest) and thus snowballing compound interest over time. I like I bonds and buy them every 2 weeks, but you have to understand you are not adding principle to individual bonds. Once its purchased that’s it. Any further purchasing is a new bond.
@@HealthyWealthyandWise Sorry, I'm brand new to all of this. Is it better to buy ten $1,000 bonds before the end of October 2022 or one $10,000 bond? Considering that if you needed the money down the road, that you could "cash" three of the $1,000 bonds (for instance) and keep the rest in there, if you wanted to. Or would that just be more confusing with the interest rate changes/timing of maturity, etc...?
Just purchased an I bond in June. Didn't see a way to add a beneficiary. What happens after the death of a bond holder?
search How do I add a secondary owner or beneficiary to my securities for i bonds and it will give you instructions. it is part of editing registration under managedirect tab
Great question: see here for more details:
www.treasurydirect.gov/indiv/research/indepth/ebonds/res_e_bonds_eedeath.htm
Question, $10,000 per calendar year purchase limit. Does that mean that if I buy 10K in August 22 that I can buy 10K in January 23. Or do I have to wait until August 23 to make the next purchase. Thanks in advance to any smarter than me RUclipsr for the response. Regards, Robert Jude
Thanks I was just wondering the same thing.
I did see this in a comment below
Jerry Lance
4 weeks ago
Each calendar year you can purchase the 10,000 total for each of you. Does not have to be spaced out in a 12 month time though. You can purchase any month like July 2022, then as soon as Jan 2023.
@@alphahooker Thanks - That's the way i interpreted it. Just never sure when dealing with the US Government. Thanks for verifying.
Looks like you already you got an answer! Just 10k in a calendar year...so you could buy 10k in Dec and then literally buy another 10k in Jan 2023.
I’m from Ghana. Can I buy one?
Great question...unfortunately you might not be eligible if you're a citizen of Ghana. Here's the criteria to buy one:
* have a Social Security Number and meet any one of these three conditions:
1. United States citizen, whether you live in the U.S. or abroad
2. United States resident
3. Civilian employee of the United States, no matter where you live
Very helpful, thankyou
thank you for the information that you had shared.i hope to hear from you more of this kind.
Thank you! I just put out another detailing the differences between I bonds and TIPS bonds and my personal experiences with both if you're interested
You are my second Opinion! Thank You!!
Thank you--I appreciate that! I'm thinking we must've been on the same page 😊
How do you get ibonds with your taxes
If you have already received a 5k Tax Refund are you able to take that money and buy an I Bond or does it have to be purchased before the refund is sent out?
That's a good question and I'm not 100% on this, but because you have to file form 8888 when you complete your taxes, I would believe that it has to be done at the time of the filing and not afterwards.
Thanks for the follow up and for your very Informative content.v
@@kenkelly382 You are welcome! Sorry it took awhile for me to get to your question...just been so busy as of late.
Can you invest like $50 a week and build it up?
Yes, you can...you can invest with as little as $25 at a time. Good question👍
Hey, me and my wife share a bank account. Can we both deposit 10k to the treasury website under separate logins?
Are savings are protected from a law suit?
That's a good question that I never considered. I would not feel confident in answering this so I would recommend consulting with an attorney on this to ensure you get the right answer.
FANTASTIC explanation. Thank you sir : )
Thank you so much! I really appreciate you taking the time to comment!! 🙏
Hi this kind of bonds are tax deductible?
no, but they are only subject to federal income tax and not state or local.
Agree with Han's answer. Additionally, if used towards higher education and meet the criteria, you may not have to pay taxes on the interest in that scenario,
Thanks for the info. I prefer my Bitcoin.
Sure thing!
What about minor accounts? Say I have 3 kids can I purchase each of them up to a $10,000 ibond per year?
Yes you can...more details on how to do this here: www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_ibuy.htm#who
The best DIYer, I've ever seen!
Thank you! I can't tell you how much I appreciate your support...you are AWESOME!!
So approximately how much would an initial investment of a $1,000 I Bond earn after one year at say 9% ???
So it would be a little over $92...because at 6 months you would earn interest of 4.5% (half of the annual rate of 9%) which would go on to your principal and then your bond would earn another 4.5% of the adjusted principal which would then be $1045. So in a year if the 9% rate held, you would come in at $1,092.02.
Thank you! You did a great job explaining this.
Thank you! I appreciate the feedback 🙂
What about if i have 1 million in checkings.can i transfer that into i bonds?
You can only buy $10,000 worth of ibonds per year. And you have to do that thru the government site (which has weak reporting features).
How can I sell I-bond?
Good question...if you bought an electronic one on TreasuryDirect and you've had it for at least 12 months, you just redeem it through your account. If it's a paper bond, the easiest way is to take it to a local bank that cashes them. More details/options: www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_iredeem.htm
Andddd not only inflation but the mere fact that your deposit is a unsecured loan to the bank.... You need to find out what that means...
Can you get these in Australia?
Great question...unfortunately most likely not unless you meet the criteria to buy one:
* have a Social Security Number and meet any one of these three conditions:
1. United States citizen, whether you live in the U.S. or abroad
2. United States resident
3. Civilian employee of the United States, no matter where you live
@@HealthyWealthyandWise Yeah damn, thought that might be the case.
What's the penalty if I withdraw my I Bond after one year?
No penalty. You just loose the interest % for last 3 months since selling within 5 yr
If I buy an i bond for $10,000 at the end of July 2022 can I buy another 10,000 in January of 2023 I guess it's during the calendar year right if you're by in July 2022 do I have to wait a full year to buy another 10,000 thanks for any help
You can purchase in July then Jan. Anytime during each calendar year.
@@jerrylance4932 thanks Jerry
@@jerrylemmens8034 Yep, it's the calendar year...could literally buy 10K in Dec 2022 and then another 10K in Jan 2023
Question? I purchased 2 I bonds for 10k each (myself and wife) in Jan. Can I buy 2 more next Jan? Or am I only limited to the 2 I purchased?
Each calendar year you can purchase the 10,000 total for each of you. Does not have to be spaced out in a 12 month time though. You can purchase any month like July 2022, then as soon as Jan 2023.
@@jerrylance4932 thanks Jerry. Much appreciated. I will watch for your content..
Glad Jerry was able to help you out! Just to add, you can buy 10k, per person, per calendar year...and as Jerry said, anytime in the calendar year. Could be 10k per person on Dec. 2022 and then more in Jan 2023.
I bought an I bond as soon as I heard about them, but that still leaves $100,000 sitting in a money market fund, doing nothing. And I don't want to put it into the stock market. Do you have any other videos that might help? -- charles johnson, sacramento CA
It's a great question and one I wish I had the answer to myself! No great words of wisdom here because I never claim to be able to predict the future but I'd consider maximizing investments in any retirement accounts and/or HSAs for any money you don't need in the near future. Those could be in stocks or bonds ETFs, or a combination based on your risk tolerance, or even consider real estate through a REIT. I'd also consider paying down any debts you may have first (including a mortgage)...these are always good things to do no matter what for money you don't need now. I have videos on all of those, but for me, I wouldn't make big moves with my money all at once. There's something to be said about having a solid emergency fund and money available to buy back into the market when prices are real low. I can tell you I was dabbling buy some stock ETFs when things were going down, but over the past few weeks with most things going up, I've been just holding for now. Just do what you're comfortable doing. Sometimes doing nothing when things are crazy and volatile is a good option--that doing nothing in your money market fund is was beating the market by 20-30% until about a month ago. Good luck!