Thanks for visiting our personal finance channel! We hope this free content will help fast-track your financial journey! Please note that there are questions/ comments which I will not be able to answer without fully understanding your financial, personal & other circumstances. Everyone's financial journey is different. If you wish to set up a consultation call & discuss whether we can help you on an individual basis, please complete the Work With Us form on our website: www.diamondnestegg.com
I've watched a lot of other people's videos on investing for years but I've got to say I've never seen anyone present such complicated subject matter in such a clear, concise, and easy to understand format as you. It's really appreciated! I especially like the way you compare and contrast different methods of investing. Very thorough and very, very clear. And the hand gestures do not bother me at all as someone previously mentioned. Keep doing what you're doing.
@@studiochange It'll depend on your financial circumstances & market/ inflation outlook, but if you're willing to hold the TIPS to maturity, you're at least protecting your purchasing power.
@@studiochange I haven’t bought a CD since I was a in my teens or early 20s, when interest rates paid on CD’s was 8-10%. The rates just aren’t there. Marcus is a rare exception (4% on a 1 year CD), but there are so many banks that pay ridiculously low interest rates on CDs and then you have to pay state income tax on the interest. Unless you live in a state where you don’t pay state tax on income, why do that? For example, I just looked at my bank, Wells Fargo, and they pay 3% interest on a seven month CD. They pay a much lower rate of 0.3% on a one-year CD. Unbelievable! Who the heck buys one year CDs at that rate, then pays state income tax on it? You’re much better off buying a 26 week treasury bill, which currently pays over 4% and you don’t have to pay state tax on it. I also have an online savings account with Brio Direct, and it’s currently paying 3.75% APY, plus, the money is not tied up for months or years. It’s liquid.
this is my first time watching your channel. you make it sound less complicated and less confusing.thank you for a detailed explanation. i would definitely watch you again.
Thanks Diamond Nestegg. I have started to buy treasury bills and I-bonds after watching many of your great videos. It is much faster than reading the website itself.
Kudos for presenting Treasury Direct math in a great understandable way with helpful tables of comparison between products. I have only looked at two of your videos, but am very impressed. I will be seeking out more. Thanks for your great content.
Thank you Diamond! We did each yesterday wife & I $10,0000 purchased & $10, 000 each put in gift box. Your videos were are best gov should hire you! We had no problems with treasury direct now we gotta add beneficiaries for our individual purchase. However, our gifts has POD beneficiares.
Hi, just started watching your channel today when researching iBonds vs TIPS. Great job on your content and presentation! I watch several financial content providers and found your info very informative and presentation style engaging. Thanks for sharing that loophole that was one I have not heard of regarding the gifting. You can also go above the iBond annual limit by buying iBonds in a trust and for your business using your EIN.
I just wanted to say thank you for this amazing video! I have never seen such a clear and to the point informational video on youtube without the self promotion/hype/subscribe and like bs. Keep up the good work!
Thank you so much for making these videos. You are incredibly clear and your bio that I read on your RUclips profile is very impressive. I subscribed! I really really really appreciate the service you are doing to humanity!!!
I'm now leaning more towards TIPs as an inflation hedge. I like the unlimited amount you can purchase and the breakeven rate on the 5 year only being 2.7% seems like a good bet at this time.
Thanks Jennifer for all your research and information. We recently set up linked accounts for our minor children with your video help. Great discovery on the loophole too.
I put 50 grand in TIPS in my fidelity ira account about 18 months ago. It is DOWN about 3 percent. I am unclear why a nearly 10 percent inflation rate and it loses 3 percent . The only reason I haven't pulled the money is a lack of good options.
Also, a little confused about the i-bond composite rate calculation. Everyone states that i-bonds are a good hedge against inflation but given the formula for computing the inflation rate component of the index, we are actually looking at change over the last 6-month period. Wouldn't that mean that, hypothetically, if the CPI went to 10% and stayed there for a year, ie. no change, the inflation rate component would be 0? And since the fixed component is currently 0, your bond, if kept, would give you 0% during a 10% inflationary period. I must be miss understanding something.
So what I understand about I-Bonds...If my wife and I each purchase a $10k bond before end of April, we will get 7.12% for the next 6 months, then 9.62% projected rate for the following 6 months? Is there a calculator to determine how much interest would be on this purchase of each bond? Thank you!
Yes to your 1st question. Regarding your 2nd question, there isn't a calculator that will actually give you this number - this is the closest one that TreasuryDirect offers on their site: www.treasurydirect.gov/BC/SBCGrw, but it's not very flexible. I've calculated this interest amount already though in this video (around minute 4:30): ruclips.net/video/WLGmlz1iR8g/видео.html
Thanks for your very nicely explained differences! A question regarding #8 return of principal. You mention that for I bond if we withdraw money before maturity we will get back our principal. Don't we get back the principal and interest?(understand 3 most interest less if less than 5 years) . What's the point of 30 years maturity ? Thanks
@@DiamondNestEgg HI Jennifer thanks for responding and clarifying. Your videos are very informative and very helpful. All the best wishes to you and your channel. Regards
My wife and I have a revocable trust. We planning on putting the max out individual contributions. Can we invest another $10,000 in a Treasury Direct account for the trust? We file jointly, and the Trust does not have its own tax ID #. I believe my SS # is the one identified with the trust. Also can you ID beneficiaries in the Trust Direct account?
Yes, you can - here's our how to buy I-Bonds with your trust video: ruclips.net/video/7OWgbccetv8/видео.html You cannot add beneficiaries to a TD trust account.
No - you redeem it in your TD account after the minimum holding period. Just take note of the early withdrawal penalty if holding for less than 5 years.
19:46 $1k invested into the S&P 500 once every decade starting in 1960 would be worth almost half a million dollars today?? Mind blown! Id need to double check this too. There must be many millionaires from that time if true!
I just bought I bonds. So the current 9.62% interest on an I Bond is not considered an annual rate? But that I will make 9.62 % on my investment in just the first 6 months. With that, you're saying that I have to add the new interest rate in November 2022, to get my total annual percentage payout?
Correct - the 9.62% is the annualized rate TD quotes, but it changes every six months. Here's the section from our I-Bond basics videos that walks through this: ruclips.net/video/adzmox__2zM/видео.html
@@DiamondNestEgg So if it is an annualized rate, and say the rate this November goes to 5%, wouldn't I average 7.16% for the first year? (9.62 first 6 months+ 5 second 6 months = 14.32/2 = 7.16%) Or would it just be (9.32 + 5) a 14.32% return like you mention in the video?
@@shafferl56 If you assume the annualized I-Bond rate goes to 5% at the November rate reset, what you would get is (9.62 / 2 for the first six months) + (5.00/ 2 for the second six months)
Bought 10K in I bonds a few days ago. Still don't understand TIPS very well. It sounds like you are saying that if you buy a TIPS you get a certain percent of interest....$1000 purchase + 7% interest = $1070 after one year. But during that time, your principle may also drop 2%. So, if that happens you would get back $980 in principle (basically your purchase, less 2% or $980) but you still get your 7% interest ($70 or there abouts since the purchase dropped in price by $20). So the final amount you would end up with if you cashed out after 12 months would be somewhere around $1050. Is that correct?
Not quite - just remember that the principal, and therefore, your interest payment get adjusted based on inflation, as described in the video. What you get back when you redeem depends on whether or not you're holding your TIPS to maturity: you’re guaranteed to get back your principal (or whatever the inflation-adjusted principal is if that's higher) when you hold your TIPS to maturity. BUT if you don't hold your TIPS to maturity - if you sell them early - you get the market value, which can be higher or lower than your original investment.
Hmm, the gifting is interesting, it makes sense if there is a year they would not want to buy I-bonds in the relatively near future. The 10,000 limit is on the initial amount, ... or could it be when they acquire it, which might force them to receive a 10k initial gift over two years, as the accrued interest would have put them over 10k? If it is on the initial amount, then they are sort of backdating the TIPS value, which seems strange.
It's on the initial face value of the purchase. If you want more details, here is the video on I-Bond gifting: ruclips.net/video/bSoZJJypSAQ/видео.html
We just personally don’t like the negative yield if not held to maturity. TIPS are not bad, especially if you have way more cash to inflation-proof than you can reasonably put into I-Bonds. It’s just important for people to understand the implications for selling in the secondary market. If you hold 30-year TIPs to maturity, it would be similar to holding I-Bonds to maturity (except for the tax aspect)
We’ve bought some T-Bills if you’re interested in this video: Treasury Bills 2022: How To Build A T-Bill Ladder (Bond Ladder | CD Ladder) ruclips.net/video/__oqvdtLoiE/видео.html
Due to early withdrawal penalty of I-bonds, I wasn't convinced until you got to the part about TIPS having no negative inflation floor (!), so the government could take your money if they say deflation has occurred. Then again, that hardly ever happens...the examples you cited were exceptional. However, can you address RATE RISK (holding lower interest treasuries when a new higher rate is issued by the Fed such has been occurring recently)? Since this is a present and real concern, are there disadvantages to holding I-bonds versus holding TIPS, which one could roll over into new TIPS (or I-bonds) issued at the higher interest rate without incurring penalty (other than tax)? Please address gaps or errors in the formulation of my question. You briefly touch on this concept but don't talk about rollover cost/benefit. Thanks!
If you hold your TIPS to maturity, you will always get back at least your principal investment amount so the government can't just "take your money if they say deflation has occurred." And thanks for the video idea on interest rate/ reinvestment risk - I'll add it to our content list.
I like your videos. An easier way to get $20k ibonds per year is just buy it through your business which has its own EIN, you make a separate treasury direct acct for it.
TIPS ETFs aren't actual TIPS though. They're a fund that mimics TIPS behavior and (probably) hold lots of TIPS to do that. You can buy actual TIPS at Treasury auctions, either from Treasury Direct or through a broker, you will always pay full price for them at Treasury Direct while you might get them at a discount through the broker (they are allowed to underbid the auction at the risk of not getting them). Of course you know this, I just thought it might not have been a crystal clear distinction for some watchers.
hi Jennifer i purchsed 4000 thousand I bonds two weeks ago 10/15/22 im tryiing to buy more from tresury direct but the website site has been down for the last week Any suggestions? Is it do to the inflation rate heading to 12.2 in November?
The updated prediction is 6.48%. Here’s the latest video: 6.48% November 2022 I Bond Rate | How Much Could You Earn ruclips.net/video/_l2siokfyok/видео.html
I tried putting some of my tax refund towards an I bond by asking tax preparing to deposit money to my Treasury Direct account, but they told me the only way they cold use the tax refund for I bonds was to get me a paper certificate.
Isn’t a big difference the fact that if you bought I bonds on Oct 28, you know the rate you are getting for next 12 months. But for TIPS, you only know the rate for next 3 months since TIPs regency CPI is only a 3 month lag. And we know there was no inflation for 2 of 3 prior months. So TIPs weren’t better than I bonds in October, even without the fixed interest rate.
Hey, I file tax jointly but my spouse has ITIN no ssn, how do we open her account and invest in ibond? Site does not accept ITIN but we are legal residents tax filer jointly.Thanks
According to the TreasuryDirect site, you must have a Social Security Number and meet any one of these three conditions in order to purchase an I-Bond as an individual: 1) United States citizen, whether you live in the U.S. or abroad, 2) United States resident or 3) Civilian employee of the United States, no matter where you live. You can reach out to them at Treasury.Direct@fiscal.treasury.gov to see if there's a workaround. You can also use Form 8888 to buy up to $5,000 of I-Bonds with your tax refund (you're allowed the lesser of $5,000 or whatever your tax refund amount is using this purchase method).
Love all the videos. You are impacting so many people in a positive way. Can you provide a video in near future on how to save taxes for higher education when you purchase ibonds. I started poor in my life but want to give head start to my kid. Thank you!
I received a tax refund but didn’t request to buy additional i bonds when I filled so the money came to me is there anyway I can still buy.the extra 5k
Unfortunately not - we made the same mistake with our refund a few years back & were told by our accountants that there was nothing to be done except overpay for the following year & complete the proper forms when we submit our refund/ extension. Having said that - here's a way I discovered recently to properly buy more I-Bonds - see if this might help you: ruclips.net/video/bSoZJJypSAQ/видео.html
Yes, that's what we did based on our reading of the code. There are some things you should look out for/ be aware of when you do this though. This video will walk you through all of that as well as how to do it, step-by-step: ruclips.net/video/bSoZJJypSAQ/видео.html
Jennifer, excellent info and presentation! if a spouse dies and there are I-bonds still in the gift box, what are the next steps? is it possible to unwind / reverse the transaction with treasury direct? Thx, mike
Thanks Mike! All the details to your question are at this video: ruclips.net/video/bSoZJJypSAQ/видео.html Check out the pinned comment at the very top about FAQs. It's point 2: death of gifter/ recipient.
What is the soonest that I can make a second purchase of I bonds 10000. ? I purchased my limit beginning of September 2022. Can I get another 10,000 worth of I Bonds again in Jan of 2023?
You're welcome! If you have an SSN & are a US resident, you can buy an I-Bond. Here's more info from the TD website: www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_ibuy.htm
If your question is - can I set up one TD entity account (e.g. business, trust, etc) with either my EIN or my SSN, the answer is - if you have an EIN, that is what you should use. If not, use your SSN. If the question is - my company has an EIN, can I set up TWO TD accounts for the same company, one with the EIN & one with my SSN, the answer - as we read it - is no
@@DiamondNestEgg Thankyou soooo much for awsering had a 300k growth account cashed it in doing my own/Dividend/Bond/ high yield savings thing now and don't like asking brokers can I recieve those into my Scwabb account every six months?, thankyou so much for awnseing lotta scammers on RUclips used to just be a coin guy, always looking for someone to give me like a one or 2 hour one time tutoring lesson if you know anyone who wants to make a couple hundred bucks, via phone of course moving kinda quick as in a bartender opening a new restaurant in 10 days
@@DiamondNestEgg Your sooo awesome thanks for awnsering, I'm subbed liked, Commented and I'll share, hope my wife will watch 😉, as someone who wasn't a good student there's not many good teachers out their, maybe youtube but not at these brokerage firms or God-forbid banks at least
There’s no penalty in the classical sense after the minimum holding period of 45 days if you purchase through TD, but if you’re selling before maturity in the secondary market, you’re getting whatever the market is willing to pay.
You have an impeccable command of English grammar BTW! Thank you for the Information. I’ve only been getting about 5 dollars a month interest on $17,000 balance on my capitalone mm account. I’m moving to I bonds immediately.
Hi Jennifer, Brilliant, I love this channel. I have been watching your videos for about 6 months now and love them, they do describe, very well, well how to deal with IBonds and TIPS (My current interest). I do have 2 questions though, if I may? I have placed 10k in my gift box for my wife this year as beneficiary, is this the maximum I can put in the gift box for this year? (We have no children). At the start of 2023, I will have more than 10k in my gift account, as it will have earned interest, so can I put the 10k plus the interest into my wife's account or only the 10k?
1. Here's the update that I posted earlier this week on this: ruclips.net/video/MChvdjJJH1k/видео.html 2. As the rules stand now, you can transfer her the face value of $10K & she gets the $10K plus interest
Can I buy additional I bonds for my daughter which is a minor? I was thinking about getting one as a gift then when the 5 years is up use it to buy her a car. I'm actually thinking about doing it for all my children that are minors
Please see the pinned comment at the very top of this video: ruclips.net/video/bSoZJJypSAQ/видео.html Point 2- when you go to the ECFR link, it’s point c.
Hi Jennifer thank you for the video! Learning so much from every video you do. For TIPS, if I buy through fidelity or directly through Treasury direct, do they send you a form that shows you the taxable interest income to put in your tax return even if you don't sell it in that year?
Love you videos. One small nit. You don't need the music. Your work is meat and potatoes and all good. You need the music the way prime rib needs ketchup. But that is ONLY criticism.
People eat prime rib with ketchup?! On a serious note - we’ve taken care of that. The newer videos only have music in the first and last 20-ish seconds.
If your 1000$ TIP is worth 1076 after one year ,does the principal that you earn interest on stay at 1076, or does it revert back to the $1000 to figure your next 12 months principal??
The principal on TIPS is adjusted every six months based on the inflation rate & the semi-annual interest payment you receive is calculated using this inflation-adjusted principal multiplied by the fixed rate on your TIPS.
No, it pays interest out every six months to you - it’s not added onto the principal. Here’s more info from the TD site: www.treasurydirect.gov/indiv/research/indepth/tips/res_tips_rates.htm
If the TIPS interest rate is the interest rate of the comparable 30 year bond at issue MINUS the expected inflation rate, doesn't that mean the TIPS bond is inversely correlated to Inflation, not protected against it? Your example says 2.33% yield (I would argue that is the coupon rate or interest) on the 5 year bond MINUS 3.65% expected inflation providing a combined interest of -1.32%. ruclips.net/video/bIq8XXo4Vfo/видео.html Therefore, if inflation is higher, the interest rate would be even lower. E.g., 2.33% MINUS 7% expected interest would provide -4.67%. Perhaps I am misunderstanding you, but an explanation would be appreciated.
You can do that or you can open up a minor-linked account within your own TreasuryDirect account for a child under 18 and buy it directly in their name. I actually have a video coming out on this in the next few days because there are certain legal, tax & financial factors you should take into consideration when doing this.
Between spouses, typically no - but for non-spouses, if you gift more than $16K in 2022 to one person, you would need to file a gift tax return. There’s also a limit for non-US spouses. You can find more info here: www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-gift-taxes-for-nonresidents-not-citizens-of-the-united-states
@@DiamondNestEgg thanks for replying. Have not thought about it too much but is seems like if you buy a 1 yr TIPS on the secondary market you get about 1.6% "fixed rate" vs 0 on IBONDs. PS: I am glad I got my IBond gift order in earlier this week, as treasury site seems down now!
Your gift technique for buying more than the yearly $10,000 I-bond limit doesn't help when the recipient is also maxing out their I-bond purchases. In that case, do the gift I-bonds simply sit in your gift box forever--or until the recipient dies and stops buying their own I-bonds? Suppose you and your husband buy your own $10,000 each year and also buy $10,000 of gift I-bonds for each other. After, say, 30 years you both die. What happens to the $300,000 of gift I-bonds you each have in your gift boxes? Do your estates get them all at once, or are they distributed only $10,000 per year. In that case, it will take another 30 years for the estates to receive them all.
As I understand it, the strategy has worked for many of our YT community members interested in grabbing the 7.12 & 9.62 rates, when done as outlined in our gifting videos. Having said that, everyone’s financial journey is different. If it doesn’t work for you, then you shouldn’t do it.
Thanks for visiting our personal finance channel! We hope this free content will help fast-track your financial journey! Please note that there are questions/ comments which I will not be able to answer without fully understanding your financial, personal & other circumstances. Everyone's financial journey is different. If you wish to set up a consultation call & discuss whether we can help you on an individual basis, please complete the Work With Us form on our website: www.diamondnestegg.com
I've watched a lot of other people's videos on investing for years but I've got to say I've never seen anyone present such complicated subject matter in such a clear, concise, and easy to understand format as you. It's really appreciated! I especially like the way you compare and contrast different methods of investing. Very thorough and very, very clear. And the hand gestures do not bother me at all as someone previously mentioned. Keep doing what you're doing.
Thanks for the positive feedback - appreciate it (esp. the hand gestures bit) 👍
@@studiochange It'll depend on your financial circumstances & market/ inflation outlook, but if you're willing to hold the TIPS to maturity, you're at least protecting your purchasing power.
@@studiochange I haven’t bought a CD since I was a in my teens or early 20s, when interest rates paid on CD’s was 8-10%. The rates just aren’t there. Marcus is a rare exception (4% on a 1 year CD), but there are so many banks that pay ridiculously low interest rates on CDs and then you have to pay state income tax on the interest. Unless you live in a state where you don’t pay state tax on income, why do that? For example, I just looked at my bank, Wells Fargo, and they pay 3% interest on a seven month CD. They pay a much lower rate of 0.3% on a one-year CD. Unbelievable! Who the heck buys one year CDs at that rate, then pays state income tax on it? You’re much better off buying a 26 week treasury bill, which currently pays over 4% and you don’t have to pay state tax on it.
I also have an online savings account with Brio Direct, and it’s currently paying 3.75% APY, plus, the money is not tied up for months or years. It’s liquid.
Brilliantly and clearly explained. Incidentally, if you have a small business or trust, those entities can also purchase Ibonds.
Thanks!
Welcome - glad you found it helpful!
this is my first time watching your channel. you make it sound less complicated and less confusing.thank you for a detailed explanation. i would definitely watch you again.
Thanks Diamond Nestegg. I have started to buy treasury bills and I-bonds after watching many of your great videos. It is much faster than reading the website itself.
Happy to hear that you are enjoying the tutorials!
Kudos for presenting Treasury Direct math in a great understandable way with helpful tables of comparison between products. I have only looked at two of your videos, but am very impressed. I will be seeking out more. Thanks for your great content.
Thank you Diamond! We did each yesterday wife & I $10,0000 purchased & $10, 000 each put in gift box. Your videos were are best gov should hire you! We had no problems with treasury direct now we gotta add beneficiaries for our individual purchase. However, our gifts has POD beneficiares.
Thank you for what you’re doing Jennifer! As a child of the 80s I also appreciate the Izod sweater.
Hi, just started watching your channel today when researching iBonds vs TIPS. Great job on your content and presentation! I watch several financial content providers and found your info very informative and presentation style engaging. Thanks for sharing that loophole that was one I have not heard of regarding the gifting.
You can also go above the iBond annual limit by buying iBonds in a trust and for your business using your EIN.
Glad you found it useful & thanks for the additional I-Bond info! Have a great weekend!
@@user-tm1kb3fq4m You got it - it's on the list. We'll work on that shortly.
Jennifer I am not kidding when I say THANK YOU SO VERY MUCH. EVEN AT 70 I still have alot to learn. STAY WELL FRANKIE LONG ISLAND
Thanks Frankie - very happy that you found it helpful!!
Thank you, Jennifer! What is difference between TIPS and T-bills. Would it be a good idea to diversify between I-Bonds, TIPS, and T-Bills?
On the most basic level, TIPS & I-Bonds are inflation-adjusted & T-Bills are not. I'll be doing some T-Bill videos shortly.
I just wanted to say thank you for this amazing video! I have never seen such a clear and to the point informational video on youtube without the self promotion/hype/subscribe and like bs. Keep up the good work!
You’re very welcome & thanks for subscribing! 😀
Thank you so much for making these videos. You are incredibly clear and your bio that I read on your RUclips profile is very impressive. I subscribed! I really really really appreciate the service you are doing to humanity!!!
I'm now leaning more towards TIPs as an inflation hedge. I like the unlimited amount you can purchase and the breakeven rate on the 5 year only being 2.7% seems like a good bet at this time.
Thanks for sharing
Interesting. I went with 4 week Tbills and they had a great return. I'll keep an eye on I bonds as hyper inflation is looming on the horizion.
Thanks Jennifer for all your research and information. We recently set up linked accounts for our minor children with your video help. Great discovery on the loophole too.
I put 50 grand in TIPS in my fidelity ira account about 18 months ago. It is DOWN about 3 percent. I am unclear why a nearly 10 percent inflation rate and it loses 3 percent . The only reason I haven't pulled the money is a lack of good options.
Unlike I-Bonds, TIPS trade in the secondary market like "normal" bonds, so as interest rates go up, TIPS prices falls.
Also, a little confused about the i-bond composite rate calculation. Everyone states that i-bonds are a good hedge against inflation but given the formula for computing the inflation rate component of the index, we are actually looking at change over the last 6-month period. Wouldn't that mean that, hypothetically, if the CPI went to 10% and stayed there for a year, ie. no change, the inflation rate component would be 0? And since the fixed component is currently 0, your bond, if kept, would give you 0% during a 10% inflationary period. I must be miss understanding something.
You are correct, if CPI-U remains unchanged for six months & the fixed rate is 0%, then the I-Bond rate would be 0%.
Ms. Lamer, thank you for some great vids on I bonds and investment strategies! Clear and insightful!
Excellent presentation, thank you.
You’re welcome - glad you enjoyed it!
Wow. Great info. Clear and concise. Thanks so much.
You’re welcome!
Really well-organized video. Thank you so much for all the tips!
So what I understand about I-Bonds...If my wife and I each purchase a $10k bond before end of April, we will get 7.12% for the next 6 months, then 9.62% projected rate for the following 6 months? Is there a calculator to determine how much interest would be on this purchase of each bond? Thank you!
Yes to your 1st question. Regarding your 2nd question, there isn't a calculator that will actually give you this number - this is the closest one that TreasuryDirect offers on their site: www.treasurydirect.gov/BC/SBCGrw, but it's not very flexible. I've calculated this interest amount already though in this video (around minute 4:30): ruclips.net/video/WLGmlz1iR8g/видео.html
@@DiamondNestEgg Saw the video and thank you very much.
Thanks for your very nicely explained differences! A question regarding #8 return of principal. You mention that for I bond if we withdraw money before maturity we will get back our principal. Don't we get back the principal and interest?(understand 3 most interest less if less than 5 years) . What's the point of 30 years maturity ? Thanks
The comparison was to TIPS, where you don’t necessarily get back your principal if you sell in the secondary market.
OK thanks but we do get back the principal with interest maybe reduced by 3 months after the first year. Is that right? Thanks
For I-Bonds, when you cash out, you get back your principal + interest - the last 3 months‘ interest if you redeem within the first five years.
@@DiamondNestEgg HI Jennifer thanks for responding and clarifying. Your videos are very informative and very helpful. All the best wishes to you and your channel. Regards
My wife and I have a revocable trust. We planning on putting the max out individual contributions. Can we invest another $10,000 in a Treasury Direct account for the trust? We file jointly, and the Trust does not have its own tax ID #. I believe my SS # is the one identified with the trust. Also can you ID beneficiaries in the Trust Direct account?
Yes, you can - here's our how to buy I-Bonds with your trust video: ruclips.net/video/7OWgbccetv8/видео.html
You cannot add beneficiaries to a TD trust account.
You are an excellent content creator!
Is there a secondary market for I-Bonds? It is a 30 year Treasury and how do I cash out before maturity?
No - you redeem it in your TD account after the minimum holding period. Just take note of the early withdrawal penalty if holding for less than 5 years.
thanks for your information.
19:46 $1k invested into the S&P 500 once every decade starting in 1960 would be worth almost half a million dollars today?? Mind blown! Id need to double check this too. There must be many millionaires from that time if true!
I just bought I bonds. So the current 9.62% interest on an I Bond is not considered an annual rate? But that I will make 9.62 % on my investment in just the first 6 months. With that, you're saying that I have to add the new interest rate in November 2022, to get my total annual percentage payout?
Correct - the 9.62% is the annualized rate TD quotes, but it changes every six months. Here's the section from our I-Bond basics videos that walks through this: ruclips.net/video/adzmox__2zM/видео.html
@@DiamondNestEgg So if it is an annualized rate, and say the rate this November goes to 5%, wouldn't I average 7.16% for the first year? (9.62 first 6 months+ 5 second 6 months = 14.32/2 = 7.16%) Or would it just be (9.32 + 5) a 14.32% return like you mention in the video?
@@shafferl56 If you assume the annualized I-Bond rate goes to 5% at the November rate reset, what you would get is (9.62 / 2 for the first six months) + (5.00/ 2 for the second six months)
Your videos are great! I'm learning so much! Thank you!
Bought 10K in I bonds a few days ago.
Still don't understand TIPS very well. It sounds like you are saying that if you buy a TIPS you get a certain percent of interest....$1000 purchase + 7% interest = $1070 after one year. But during that time, your principle may also drop 2%. So, if that happens you would get back $980 in principle (basically your purchase, less 2% or $980) but you still get your 7% interest ($70 or there abouts since the purchase dropped in price by $20). So the final amount you would end up with if you cashed out after 12 months would be somewhere around $1050. Is that correct?
Not quite - just remember that the principal, and therefore, your interest payment get adjusted based on inflation, as described in the video. What you get back when you redeem depends on whether or not you're holding your TIPS to maturity: you’re guaranteed to get back your principal (or whatever the inflation-adjusted principal is if that's higher) when you hold your TIPS to maturity. BUT if you don't hold your TIPS to maturity - if you sell them early - you get the market value, which can be higher or lower than your original investment.
love your videos. you explain things very well and very thorough and very easy to understand thank you for your efforts!
Hmm, the gifting is interesting, it makes sense if there is a year they would not want to buy I-bonds in the relatively near future. The 10,000 limit is on the initial amount, ... or could it be when they acquire it, which might force them to receive a 10k initial gift over two years, as the accrued interest would have put them over 10k? If it is on the initial amount, then they are sort of backdating the TIPS value, which seems strange.
It's on the initial face value of the purchase. If you want more details, here is the video on I-Bond gifting: ruclips.net/video/bSoZJJypSAQ/видео.html
You're the best!
That loophole is awesome. I didn't quite get the TIPS explanation and why it's bad. I think it was potential negative yield if not held to maturity.
We just personally don’t like the negative yield if not held to maturity. TIPS are not bad, especially if you have way more cash to inflation-proof than you can reasonably put into I-Bonds. It’s just important for people to understand the implications for selling in the secondary market. If you hold 30-year TIPs to maturity, it would be similar to holding I-Bonds to maturity (except for the tax aspect)
Great video…I am just seeing this video 8n October. Is this a good time to buy bonds?
We’ve bought some T-Bills if you’re interested in this video: Treasury Bills 2022: How To Build A T-Bill Ladder (Bond Ladder | CD Ladder)
ruclips.net/video/__oqvdtLoiE/видео.html
Due to early withdrawal penalty of I-bonds, I wasn't convinced until you got to the part about TIPS having no negative inflation floor (!), so the government could take your money if they say deflation has occurred. Then again, that hardly ever happens...the examples you cited were exceptional. However, can you address RATE RISK (holding lower interest treasuries when a new higher rate is issued by the Fed such has been occurring recently)? Since this is a present and real concern, are there disadvantages to holding I-bonds versus holding TIPS, which one could roll over into new TIPS (or I-bonds) issued at the higher interest rate without incurring penalty (other than tax)? Please address gaps or errors in the formulation of my question. You briefly touch on this concept but don't talk about rollover cost/benefit. Thanks!
If you hold your TIPS to maturity, you will always get back at least your principal investment amount so the government can't just "take your money if they say deflation has occurred." And thanks for the video idea on interest rate/ reinvestment risk - I'll add it to our content list.
I like your videos. An easier way to get $20k ibonds per year is just buy it through your business which has its own EIN, you make a separate treasury direct acct for it.
Thanks for sharing!
Hi Jennifer i bought 4000 in I bond on 10/15/22I have been trying to purchase more but the website is down any suggestions?
Please see the latest community post about the TD site
TIPS ETFs aren't actual TIPS though. They're a fund that mimics TIPS behavior and (probably) hold lots of TIPS to do that. You can buy actual TIPS at Treasury auctions, either from Treasury Direct or through a broker, you will always pay full price for them at Treasury Direct while you might get them at a discount through the broker (they are allowed to underbid the auction at the risk of not getting them). Of course you know this, I just thought it might not have been a crystal clear distinction for some watchers.
That's correct, TIPS ETFs hold mostly TIPS with varying maturities. Thanks for the additional info.
hi Jennifer i purchsed 4000 thousand I bonds two weeks ago 10/15/22 im tryiing to buy more from tresury direct but the website site has been down for the last week Any suggestions? Is it do to the inflation rate heading to 12.2 in November?
The updated prediction is 6.48%. Here’s the latest video: 6.48% November 2022 I Bond Rate | How Much Could You Earn
ruclips.net/video/_l2siokfyok/видео.html
I tried putting some of my tax refund towards an I bond by asking tax preparing to deposit money to my Treasury Direct account, but they told me the only way they cold use the tax refund for I bonds was to get me a paper certificate.
very informational video. Thank you very much
Glad you enjoyed it!
Isn’t a big difference the fact that if you bought I bonds on Oct 28, you know the rate you are getting for next 12 months. But for TIPS, you only know the rate for next 3 months since TIPs regency CPI is only a 3 month lag. And we know there was no inflation for 2 of 3 prior months. So TIPs weren’t better than I bonds in October, even without the fixed interest rate.
Hello Jennifer, thank you so much for the great video. Very informative. Just subscribed.
Thanks - glad you enjoyed it!!
How do you add a beneficiary once you've set up your ibond? thank you.
Here are the step-by-step instructions: ruclips.net/video/510Y0D5hoVo/видео.html
Hey, I file tax jointly but my spouse has ITIN no ssn, how do we open her account and invest in ibond? Site does not accept ITIN but we are legal residents tax filer jointly.Thanks
According to the TreasuryDirect site, you must have a Social Security Number and meet any one of these three conditions in order to purchase an I-Bond as an individual: 1) United States citizen, whether you live in the U.S. or abroad, 2) United States resident or 3) Civilian employee of the United States, no matter where you live. You can reach out to them at Treasury.Direct@fiscal.treasury.gov to see if there's a workaround. You can also use Form 8888 to buy up to $5,000 of I-Bonds with your tax refund (you're allowed the lesser of $5,000 or whatever your tax refund amount is using this purchase method).
Just have your spouse apply for their social security number....it's very easy and free.
Love all the videos. You are impacting so many people in a positive way. Can you provide a video in near future on how to save taxes for higher education when you purchase ibonds. I started poor in my life but want to give head start to my kid. Thank you!
Noted!
Thank you for the info
Your welcome!
Fantastic video!
Thanks - glad you enjoyed it!
Thanks
You're welcome!
I received a tax refund but didn’t request to buy additional i bonds when I filled so the money came to me is there anyway I can still buy.the extra 5k
Unfortunately not - we made the same mistake with our refund a few years back & were told by our accountants that there was nothing to be done except overpay for the following year & complete the proper forms when we submit our refund/ extension. Having said that - here's a way I discovered recently to properly buy more I-Bonds - see if this might help you: ruclips.net/video/bSoZJJypSAQ/видео.html
@@DiamondNestEgg thanks for your reply.
Hi Jennifer, thanks for the great info. Do I understand you correctly: you and your husband can legally gift I-bond to each other?
Yes, that's what we did based on our reading of the code. There are some things you should look out for/ be aware of when you do this though. This video will walk you through all of that as well as how to do it, step-by-step: ruclips.net/video/bSoZJJypSAQ/видео.html
@@DiamondNestEgg so this means a combined total annual purchase of $40K for my spouse and I right?
Good content. Thank you for the info.
You’re welcome!
Great job 👏 thanks
Jennifer, excellent info and presentation! if a spouse dies and there are I-bonds still in the gift box, what are the next steps? is it possible to unwind / reverse the transaction with treasury direct? Thx, mike
Thanks Mike! All the details to your question are at this video: ruclips.net/video/bSoZJJypSAQ/видео.html
Check out the pinned comment at the very top about FAQs. It's point 2: death of gifter/ recipient.
What is the soonest that I can make a second purchase of I bonds 10000. ? I purchased my limit beginning of September 2022. Can I get another 10,000 worth of I Bonds again in Jan of 2023?
Yes
Thank you for this amazing sharing! One Q: Only US citizens can buy I bonds? Can US resident buy as well?
You're welcome! If you have an SSN & are a US resident, you can buy an I-Bond. Here's more info from the TD website: www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_ibuy.htm
Nicely done. Can I Bonds be purchased using EINs owned in additional to your SS number?
If your question is - can I set up one TD entity account (e.g. business, trust, etc) with either my EIN or my SSN, the answer is - if you have an EIN, that is what you should use. If not, use your SSN.
If the question is - my company has an EIN, can I set up TWO TD accounts for the same company, one with the EIN & one with my SSN, the answer - as we read it - is no
How often donfhe Dividends from tips get deposited to your brokerage of checking account?
TIPS pay interest every six months
@@DiamondNestEgg Thankyou soooo much for awsering had a 300k growth account cashed it in doing my own/Dividend/Bond/ high yield savings thing now and don't like asking brokers can I recieve those into my Scwabb account every six months?, thankyou so much for awnseing lotta scammers on RUclips used to just be a coin guy, always looking for someone to give me like a one or 2 hour one time tutoring lesson if you know anyone who wants to make a couple hundred bucks, via phone of course moving kinda quick as in a bartender opening a new restaurant in 10 days
@@DiamondNestEgg And buy coins I mean like silver coins numismatists not crypto
@@DiamondNestEgg Your sooo awesome thanks for awnsering, I'm subbed liked, Commented and I'll share, hope my wife will watch 😉, as someone who wasn't a good student there's not many good teachers out their, maybe youtube but not at these brokerage firms or God-forbid banks at least
As for TIPS, is there any penalty if I sell the TIPS say 5 years after for a 10 years TIPS?
There’s no penalty in the classical sense after the minimum holding period of 45 days if you purchase through TD, but if you’re selling before maturity in the secondary market, you’re getting whatever the market is willing to pay.
You have an impeccable command of English grammar BTW! Thank you for the Information. I’ve only been getting about 5 dollars a month interest on $17,000 balance on my capitalone mm account. I’m moving to I bonds immediately.
If I buy a $10000 I bond in August, can I buy another $10000 in January? Treasury Dept says “calendar year”.
Yes
Thank you very much. Love your videos.
Hi Jennifer, Brilliant, I love this channel. I have been watching your videos for about 6 months now and love them, they do describe, very well, well how to deal with IBonds and TIPS (My current interest). I do have 2 questions though, if I may?
I have placed 10k in my gift box for my wife this year as beneficiary, is this the maximum I can put in the gift box for this year? (We have no children).
At the start of 2023, I will have more than 10k in my gift account, as it will have earned interest, so can I put the 10k plus the interest into my wife's account or only the 10k?
1. Here's the update that I posted earlier this week on this: ruclips.net/video/MChvdjJJH1k/видео.html
2. As the rules stand now, you can transfer her the face value of $10K & she gets the $10K plus interest
Can I buy additional I bonds for my daughter which is a minor?
I was thinking about getting one as a gift then when the 5 years is up use it to buy her a car. I'm actually thinking about doing it for all my children that are minors
Here's the video on how to buy I-Bonds for your kids: ruclips.net/video/YlE3Uxoeah4/видео.html
Excellent content and presentation. I’m now a subscriber.
Welcome!
Any other suggestions for 5-10 year saving options?
We’re working on some stuff for after the summer - stay tuned!
Excellent presentation and extremely clearly explained. I will be also looking out for more 5-10 yrs savings options.
12 Months, with early redemption penalty of last 3 months interest if you redeem within the 1st 5 years.
I just answered this in your comment on another video.
Great job!
Fantastic videos & presentations. Would you do a video on Floating Rate Notes (FRN)
I’ll put it on the list!
If you die without delivering money in your ‘gift’ account, what happens if that money exceeds the i bond annual limit for the giftee?
Please see the pinned comment at the very top of this video: ruclips.net/video/bSoZJJypSAQ/видео.html Point 2- when you go to the ECFR link, it’s point c.
What would happen to TIPS if the FED pauses?
Nothing directly - it depends on where inflation is.
Hi Jennifer thank you for the video! Learning so much from every video you do.
For TIPS, if I buy through fidelity or directly through Treasury direct, do they send you a form that shows you the taxable interest income to put in your tax return even if you don't sell it in that year?
You're welcome! You'll get both tax forms even if you do not sell during the year. With TD, you need to download them yourself though.
Love you videos. One small nit. You don't need the music. Your work is meat and potatoes and all good. You need the music the way prime rib needs ketchup. But that is ONLY criticism.
People eat prime rib with ketchup?! On a serious note - we’ve taken care of that. The newer videos only have music in the first and last 20-ish seconds.
@@DiamondNestEgg yes I was paying you a compliment. Your videos need background music like prime rib needs ketchup!
@@edsteadham4085 thanks, I know! That was my attempt at a joke BEFORE coffee.
If your 1000$ TIP is worth 1076 after one year ,does the principal that you earn interest on stay at 1076, or does it revert back to the $1000 to figure your next 12 months principal??
The principal on TIPS is adjusted every six months based on the inflation rate & the semi-annual interest payment you receive is calculated using this inflation-adjusted principal multiplied by the fixed rate on your TIPS.
@@DiamondNestEgg AND THE interest payment is added to the principal? thanks
No, it pays interest out every six months to you - it’s not added onto the principal. Here’s more info from the TD site: www.treasurydirect.gov/indiv/research/indepth/tips/res_tips_rates.htm
F9r l to 3 month time spa which is better?
Thank you for explaining why my TIPS are tanking. When I call E*TRADE - I get a poor explanation.
Glad you found the video helpful
If the TIPS interest rate is the interest rate of the comparable 30 year bond at issue MINUS the expected inflation rate, doesn't that mean the TIPS bond is inversely correlated to Inflation, not protected against it?
Your example says 2.33% yield (I would argue that is the coupon rate or interest) on the 5 year bond MINUS 3.65% expected inflation providing a combined interest of -1.32%.
ruclips.net/video/bIq8XXo4Vfo/видео.html
Therefore, if inflation is higher, the interest rate would be even lower. E.g., 2.33% MINUS 7% expected interest would provide -4.67%.
Perhaps I am misunderstanding you, but an explanation would be appreciated.
Can you buy I bond as a gift to each of your kids to fund their education in the future?
You can do that or you can open up a minor-linked account within your own TreasuryDirect account for a child under 18 and buy it directly in their name. I actually have a video coming out on this in the next few days because there are certain legal, tax & financial factors you should take into consideration when doing this.
Why is the TIP etf down 10%for the year?
I don’t know which TIPS ETF you are referring to, so can’t say for sure - but if I had to guess, I’d say it’s probably due to rising interest rates.
Can I buy TIPS into a Roth IRA?
Yes
@@DiamondNestEgg Thanks
Thank you so much for such invaluable information and for explaining everything so clearly.
Hopefully there isn’t a gift tax?
Between spouses, typically no - but for non-spouses, if you gift more than $16K in 2022 to one person, you would need to file a gift tax return. There’s also a limit for non-US spouses. You can find more info here: www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-gift-taxes-for-nonresidents-not-citizens-of-the-united-states
Still same view now that real TIPS rates are positive?
For my personal portfolio, yes.
@@DiamondNestEgg thanks for replying. Have not thought about it too much but is seems like if you buy a 1 yr TIPS on the secondary market you get about 1.6% "fixed rate" vs 0 on IBONDs. PS: I am glad I got my IBond gift order in earlier this week, as treasury site seems down now!
Is the gift idea limit to $10K per recipient PER Year? In other word, you can buy another gift for your husband again next year if you want?
Would suggest watching the latest gifting update: ruclips.net/video/MChvdjJJH1k/видео.html
Your gift technique for buying more than the yearly $10,000 I-bond limit doesn't help when the recipient is also maxing out their I-bond purchases. In that case, do the gift I-bonds simply sit in your gift box forever--or until the recipient dies and stops buying their own I-bonds? Suppose you and your husband buy your own $10,000 each year and also buy $10,000 of gift I-bonds for each other. After, say, 30 years you both die. What happens to the $300,000 of gift I-bonds you each have in your gift boxes? Do your estates get them all at once, or are they distributed only $10,000 per year. In that case, it will take another 30 years for the estates to receive them all.
As I understand it, the strategy has worked for many of our YT community members interested in grabbing the 7.12 & 9.62 rates, when done as outlined in our gifting videos. Having said that, everyone’s financial journey is different. If it doesn’t work for you, then you shouldn’t do it.
A speaker who constantly gestures with hands is difficult to watch and listen to.
Noted
@@DiamondNestEgg e.g. My Pillow guy
Great job on this video!
Great info!