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Ask HN: Have you bought I bonds yet? Why not?

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Re: Ask HN: Have you bought I bonds yet? Why not?

#21

Post by ghaff »

avemg wrote: post #12

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's almost certainly a Medallion Signature which is somehow a Notary with superpowers.

I actually needed one earlier this year. My bank no longer had a special signature person at the branch so they sent it to special signature central--which somehow didn't have the info they needed even though the bank branch sent it to them. Ended up just doing the longer drive to my broker and handling the transaction there.

Re: Ask HN: Have you bought I bonds yet? Why not?

#22

Post by dragontamer »

> 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.

--------

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

Re: Ask HN: Have you bought I bonds yet? Why not?

#23

Post by knorker »

$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.

Re: Ask HN: Have you bought I bonds yet? Why not?

#24

Post by NotYourLawyer »

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.

Re: Ask HN: Have you bought I bonds yet? Why not?

#25

Post by adabyron »

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

Re: Ask HN: Have you bought I bonds yet? Why not?

#26

Post by darkstar999 »

codegeek wrote: post #7

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.

> they make you type the password

I guess this is obscure security for avoiding keyloggers? You can use your browser's developer tools to inspect the element and fill in the input value.

Re: Ask HN: Have you bought I bonds yet? Why not?

#27

Post by BbzzbB »

bombcar wrote: post #11
freediver wrote: post #8

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.

You can double that and more if you're married, and use the tax refund trick. But the reality is that 10% on 10k isn't a terribly large amount of money at the end of the day.

You're gonna invest that 10k somewhere in all likelihood, a risk free 10% is pretty much unbeatable, it's higher than most high-yielding (and vice) stocks, but without bearing the risk of capital loss.

Seems silly to me not to use I-bonds even if the cap is relatively low, sure wish I could (not American).

Re: Ask HN: Have you bought I bonds yet? Why not?

#28

Post by dragontamer »

adabyron wrote: post #25

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…

> You'll then get the next rate which is most likely 3% for 6 months

Which is less than the 3.9% you get from a 6M treasury right now. If i-bonds really only get 6% in the next rate, you've lost money compared to 6M or 1Y treasury bonds.

Re: Ask HN: Have you bought I bonds yet? Why not?

#29

Post by jaywalk »

ed25519FUUU wrote: post #9

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.

You can pop open Dev Tools and remove the "readonly" attribute on the field. Ridiculous that it has to be done in the first place, but a lot easier than clicking out a complex password on a virtual keyboard.

Re: Ask HN: Have you bought I bonds yet? Why not?

#30

Post by adabyron »

benmanns wrote: post #20
bombcar wrote: post #11

Earlier quoted context omitted.

You can double that and more if you're married, and use the tax refund trick. But the reality is that 10% on 10k isn't a terribly large amount of money at the end of the day.

Additionally, the 10% will probably only last for a year or two, at which point it'll be earning 1-3% and we'll have all jumped through these hoops for $100-300/year.

At this point you're pretty much guaranteed a risk free 8% for 12 months. That's roughly what Buffet would say you should average in the stock market. It's a great place to park cash right now.

Maybe the stock market makes a huge come back but a lot of things are pointing against that happening in the next year. The Fed & inflation, baby boomer retirements causing stocks to get sold & less risk assets bought, that whole Europe thing going on.

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