Have you bought I bonds yet? Why not?

Things I wish I knew earlier.

When you buy them, you lock in the current rate for 6 months from the date you purchase & then you get the next rate for 6 months after that. So today you get 9.62% for 6 months, so you'll technically earn 4.81% interest on your money after 6 months from the date of purchase. You'll then get the next rate which is most likely 3% for 6 months (often quoted as 6% annually). This site does an amazing job tracking what the future rate will be - https://tipswatch.com/tracking-inflation-and-i-bonds/

They will announce the final next 6 months rate in October. You can buy then (around the 15th) if you want. If you buy after November 1, you won't get the current 4.81% (aka 9.62%). But as stated, the October rate is pretty well calculated. Only 1 more inflation report will adjust it slightly. See the Tipswatch site I linked to for info on how & when it's calculated.

Each person can buy $10,000. If you got a tax rebate you can buy up to $5,000 with that. If you have a company, the company can buy $10,000.

Must be a US Citizen.

Someone who works at the US Treasury thought it was a good idea to make you type a password with a "virtual keyboard" using your mouse. So you might want to create a script in your password manager to enter in the console like this:

var x = PASSWORD_AS_STRING; for(var i = 0; i < x.length; i++){ PasswordVK(x[i]) }

Side note, my 70yr old Mom thought this was an easy process. I felt like an idiot.

The cap of $10,000 makes it not very interesting from an investment standpoint. And while the yield is great on paper, it merely lets you keep up with inflation in practice.

There are probably better ways to use $10,000 if that is all you have and you are interested in growing money - online courses come to mind.

Their website is awful and I’m afraid my money will be locked away with no recourse due to a technical error.

I tried but my account got flagged for extra validation. This requires me to take a form to a bank or brokerage so that someone there can verify my identity and then stamp the form with some special stamp.

Well I do my banking with online banks so I have no access to a brick and mortar branch nor do I really have the time or inclination to try to talk to somewhere there and get what they're asking for.

It just doesn't seem worth the hassle given the unique account with weird sign-up process, low maximum investment, and lock up period.

Like it's a theoretically optimal way to invest $10k that won't be needed in the short term, but it's also just a few hundred dollars more than I get from a money market account which has far fewer restrictions. Plus another account to deal with.

If I could add it to a portfolio in an existing investment account, I'd do it.

No one has yet mentioned the tax-advantaged aspect. Interest income from I-bonds is exempt from state income tax, and federal tax can be deferred until you cash them in or 30 years, whichever comes first. Paying tax on the interest when you are in a lower tax bracket later in life makes a lot of sense. The income can also be tax-free if used for qualified educational expenses for you or some family members (not going into the details here).

It seems to me the only competition here is bank CD (certificate of deposit) for 1 to 5 year term, which also has an early withdrawal penalty but is not tax advantaged in any way, and even now, you'd be hard pressed to get more than 2-3% interest on CDs from most banks, and that rate usually does not adjust at all during the life of the CD.

As some have mentioned, this is also a pretty good place to keep emergency funds, once you get past the one year lockup.

Probably one of the most user-hostile websites I’ve ever used. They actually expect you to “click” a virtual keyboard to input your password! Truly astounding.

Yes. The limit is 10k per calendar year though in case anyone is wondering. Their website looks like it was built in 1995 and they make you type (edit: actual click on virtual buttons) the password (cannot copy/paste from password managers) because they have that "virtual keyboard" BS. But it did work ultimately.

[Not investment advice.]

I'm maxed out, and maxed out last year too.

If ones investments are in leveraged instruments like calls and futures, then after levering up to sensible levels of volatility (the Kelly Criterion implies there is a maximum level for ones bankroll and investments, no matter how high ones risk tolerance), one will still have a lot of cash left over that needs to be parked somewhere that at least keeps up with inflation.

I-bonds are attractive for this role because of the retroactive effects of recent inflation. But the cap means it's not enough for all of my excess cash. One who is below that cap might still want to keep a portion in something more liquid. In my case, it's a small enough fraction (because programmers are paid well in America) that I'm not too concerned about the lack of liquidity in the first year.

Yes, it's great. I've been buying maximum amount for a few years. It's basically my emergency cash fund. Sure it's locked away for a year but once you get it started it's liquid enough and it gets better rates than any savings accounts, CDs, etc.

I’ve been buying the maximum for years. They’re uninteresting as an investment since all they do is keep up with inflation, so I certainly wouldn’t want to put much money into them even if I could. But it’s only $10k per year, and it seems fine as a small hedge position.

> If you have not bought I bonds yet, why not?

With interest rates climbing, I do believe there's a chance of deflation risk, which would set the I-bonds to 0% in the next interest rate. That is to say, I-bonds are variable rate against inflation. US Treasury bonds are fixed rate. You get exactly the rate that's on the tin.

I think that I-bonds are more difficult to understand and calculate in light of this. Its easier and simpler in my opinion, to simply invest into 1M or 3M treasuries while waiting for the interest rates to climb up.

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Its a hard balancing act for sure. I-Bonds (and their closely related TIPS brothers) are a play on inflation. Which means you need to understand one more thing in the market.

At least I-bonds are capped at 0% losses. TIPS may lose value in deflation

Only US citizens, residents, and government employees can buy them.

We have been buying I-series bonds for now 15 years. We haven't yet bought this year, will buy after November reset, just to make sure next reset doesn't increase fixed rate portion. In the long term, fixed rate portion makes a big difference. Variable rate portion changed every 6 months.

I-series Bond Mega Thread on Bogleheads forum https://www.bogleheads.org/forum/viewtopic.php?f=10&t=346091...

I think folks mentioning that it’s not worth due to the yearly limit might not be thinking in the long term.

If every year you invest $10k, in 20 years you will have $200k that will have grown tax deferred to likely $400k, which should be a really nice sum equivalent to perhaps 5-10 years of living expenses, which pairs well with the equity side of the portfolio.

I’ve been building my ibonds position for 8 years now, and to me they are an excellent long term holding to BND that will help me in retirement to dampen the volatility of my equities in my 80/20 allocation.

No because when I went to register, my account couldn’t be automatically authorized (probably because I had just moved). Instead for authorization they require that I fill out a form, have a certifying officer at a financial institution sign it, and mail it in. I couldn’t be bothered for only 10k.

Form: https://www.treasurydirect.gov/pdf/rs/acctauth.pdf

$900 (10k at 9%) is less than one day's work going by my day job totalcomp. The extra cognitive load of another investment platform is better spent on my day job.

And as others have said, this is comparing to 0%. If you look around you can find everyday banks giving "whole digits" on savings account for at least these small amounts, so it's more like $700 compared to baseline cash.

I'd maybe be interested if it 10x'd the limit.

Because I am not a US citizen :)

Is there something similar for EU citizens?

The paper work led to delay for me. Online purchase wasn't possible and I got asked to apply things via postal.

If you're going to ask questions specific to a cou try, please specify which country in the title.

I bought the max for everyone in my household. Should be a good savings vehicle for the kids college.

I am a US citizen living abroad. It's close-to-impossible to create the account to buy them.

You can get a free grand by applying to certain credit cards, or better yet, buying Twitter stock

Never heard of 'em before.

I think I'd rather just put money into an index fund.

It's better than cash, but there are better investments.

Yes, I have. Just learned about these recently. Pretty sweet!

Because 10% is boring and your limited to 10k/yr.

wow 1k Zzzzzzzzzz

No, I'm Canadian

not enough money to be interesting