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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?

#71

Post by giantg2 »

bombcar wrote: post #63
qqqwerty wrote: post #62

Earlier quoted context omitted.

Well, if you and your spouse had put in 10k at the end of 2021, and again in 2022, and then put another 10k at the start of 2023 you will have built up your I-Bond allocation to $60k in about a 13-14 month timeframe. What is nice about a position of that size is that that amount is in the ballpark of a typical families expenditures in a year (ignoring the occasional big ticket items like a car), which means you have…

Yeah, they can be wonderful; but not everyone will want to bother with them (I find one of the easiest is to just get your tax return in physical bonds if you want to dabble).

How do you get a physical bond? I thought they went all virtual these days.

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

#72

Post by kccqzy »

gilch wrote: post #69

[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…

I too have sizable positions in ES futures but I'm worried enough that I put all the left over cash as just cash. In the event of a Black Monday event in 1987, one would want immediate access to cash to replenish the futures account, don't you agree.

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

#73

Post by gilch »

kccqzy wrote: post #72
gilch wrote: post #69

[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…

I too have sizable positions in ES futures but I'm worried enough that I put all the left over cash as just cash. In the event of a Black Monday event in 1987, one would want immediate access to cash to replenish the futures account, don't you agree.

That's really only a concern for the first $10k in the first year. After that, everything (but your most recent year) is at least a year old and you can exit early if you have to.

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

#74

Post by giantg2 »

lotsofpulp wrote: post #41
BbzzbB wrote: post #27

Earlier quoted context omitted.

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).

As other comments have indicated, the time and effort to actually invest the $10k in ibonds is considerable given the difficulty of using the website. I also want my cash to be accessible within a few days, so I prefer FDIC insured savings accounts. For locking up money for months or a year in an ibond, the annual gain compared to a savings accounts is only a maximum of $700 or so. The rest I invest in equities, whic…

"ibonds is considerable given the difficulty of using the website."

First, this is ridiculous. It was pretty easy to set up. Yeah, the virtual keyboard is weird and there's some waiting with the verification, but it's trivial effort.

"I also want my cash to be accessible within a few days"

Now we're comparing apples to oranges. If you need the cash in a few days (kind of odd/rare to begin with), then you want a saving account not an investment. That said, withdrawing your I bond capital does not take months or years (withdraw anytime with only a loss in interest if less than a year).

"The rest I invest in equities, which assuming the US has a functioning society in 5, 10, or 20+ years, will be worth far more."

Depends on the equities and your definition of a functioning society. It's more likely to be flat, at least in real terms, over the next decade.

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

#75

Post by mister_tee »

mNovak wrote: post #67
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…

I find it easiest right-click>inspect the password field in chrome, and paste my password directly into the html value field. Another thing to note, if you're particularly trying to load up, is you can buy I-bonds as a 'gift', separate of your individual limit. Specifically you and your spouse can buy $10k each directly, plus each buy $10k as a gift to the other (thus $40k total). You can actually buy >$10k as a gift…

I might be wrong but don't gifts count against the recipient's annual $10k limit? That is, you could only give $2k to someone who has purchased $8k for themselves, all within the same year?

Though, here is a Bogleheads thread where people suggest buying gift bonds even beyond 10k as you mention, to get higher interest rates now, storing them in the TreasuryDirect "gift box" until a year where the recipient comes in under the limit and they can be transferred.

https://www.bogleheads.org/forum/viewtopic.php?t=306297

edit, adding:

https://thefinancebuff.com/buy-i-bonds-as-gift.html#htoc-pur...

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

#76

Post by giantg2 »

bombcar wrote: post #53
lotsofpulp wrote: post #41

Earlier quoted context omitted.

As other comments have indicated, the time and effort to actually invest the $10k in ibonds is considerable given the difficulty of using the website. I also want my cash to be accessible within a few days, so I prefer FDIC insured savings accounts. For locking up money for months or a year in an ibond, the annual gain compared to a savings accounts is only a maximum of $700 or so. The rest I invest in equities, whic…

It's entirely possible that for a bit more hoop-jumping you could beat the 10% by continually churning where your money is for the signup bonuses; again, not likely actually worth it considering the time.

What sign-up bonuses?

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

#77

Post by giantg2 »

JauntTrooper wrote: post #57
BbzzbB wrote: post #27

Earlier quoted context omitted.

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).

10% of $10,000 is $1,000, but you have to pay federal income taxes on it. So you're looking at getting $600 - $800 to tie up $10,000 for a year, and you have to go through hoops and a cumbersome website to do it. It's a better deal than other fixed income investments right now, but with an after-tax return that's guaranteed to be worse than inflation, it's hard to get excited about it.

What are these hoops people keep talking about? I didn't find it hard at all.

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

#78

Post by giantg2 »

toomuchtodo wrote: post #18
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.

This. Depending on your portfolio, time value, and investment objectives, there isn’t any point in jumping through hoops for a few hundred bucks and having the funds illiquid versus something you can liquidate in a few clicks (or margin for immediate access for another opportunity).

Please, show me where I can make a few hundred dollar with less time investment on my part. I bet it goes negative.

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

#79

Post by adabyron »

mNovak wrote: post #67
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…

I find it easiest right-click>inspect the password field in chrome, and paste my password directly into the html value field. Another thing to note, if you're particularly trying to load up, is you can buy I-bonds as a 'gift', separate of your individual limit. Specifically you and your spouse can buy $10k each directly, plus each buy $10k as a gift to the other (thus $40k total). You can actually buy >$10k as a gift…

If I recall the right click & enter password as HTML didn't work. Neither did selecting the input element & modifying the value. Those are my first 2 I usually try. I'm assuming they're doing some crazy silly state/event tracking with their virtual keyboard elsewhere. I didn't dig into it that close. I just grumbled & shook my head.

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

#80

Post by kevinventullo »

timr wrote: post #34
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…

Yes, I-bonds are a bit of a meme right now, and IMO, overhyped. The other important things to note are that your money is locked for a year from purchase , you incur a penalty (3 months of interest) if you sell before 5 years, and the APY values being quoted are not indexed to inflation. I-bonds issued today yield essentially zero percent after inflation, and this will be true for as long as you hold them. Do not buy…

4.081% is close to 5%?
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