I Bonds Explained: What are Series I Savings Bonds?
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- čas přidán 3. 05. 2022
- 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.treasurydirect.gov/indiv/...
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 .
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!
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.
Great video...similified and very articulate....
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.
Thank You!!!!!! Very Informative!!!!! 🙂
Thank you!!! I really appreciate you taking the time to comment 🙂
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.
Very helpful, thankyou
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.
Will Treasury Direct send out I -bond 1099-int annually or I won’t report tax until I redeem it? Thanks.
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 🙂
Great video... You can only buy 1 10k bond a year?
Great video
Thanks
Great information. I'm planning on buying 10K for myself and 10K for my wife.
Nice! Thanks for sharing 😊
Great explanation! Just opened my accounts thanks to your information
Thanks for the feedback ~ I'm glad you found the information helpful!
Great vid
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
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 CZcams 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
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)
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
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.
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.
The best DIYer, I've ever seen!
Thank you! I can't tell you how much I appreciate your support...you are AWESOME!!
After 12 months can I sell my bonds at the face value?.
Whom would I sell them to ?.
Thanks
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.
Does the bond accrue 9.62% monthly or it is an annualized rate?
Pays semi-annually. 9.62/2
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.
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.
What do you think they’ll go to in November?
Still watching Frank G Melbourne Australia 🇦🇺 ❤️
Thank you!
I already bought 10,000 in i bonds recently.
Thanks for sharing...got mine, too!
Hey, me and my wife share a bank account. Can we both deposit 10k to the treasury website under separate logins?
Thanks for the info. I prefer my Bitcoin.
Sure thing!
I wish I knew about I bonds earlier.
What investment "vehicle" actually supersedes inflation year in & year out no matter the inflation rate; otherwise you're just failing by falling behind?
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?
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 😊
What's the website address to buy the I bonds from treasury website?
www.treasurydirect.gov/tdhome.htm
Hi I opened an I bond account in June. The treasury has not removed my deposit from my checking account. They say on treasury direct it will deposit In august. Is that correct thanks
We sent ours in the mail in June as well- still waiting.
I went into my account and asked again to take my money. Yes finally they plan to take money 8/15
@@sandycohen9350 Sorry for the delay in my reply...been super busy as of late. I'm glad it's now deposited for you. As for me, mine happened within a day or two using the online system.
Thanks for the info!👍
Sure thing! And thanks for taking the time to leave a comment 🙂
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! You did a great job explaining this.
Thank you! I appreciate the feedback 🙂
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
FANTASTIC explanation. Thank you sir : )
Thank you so much! I really appreciate you taking the time to comment!! 🙏
Excellent presentation, TU‼️👍‼️
Thank you very much! I appreciate you taking the time to share some feedback 😊🙏
Great job sir.
Thank you! I appreciate you taking the time to comment 😊
Very informative!
Thank you! I appreciate you letting me know 🙂
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!
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.
Do you know what bond for 5 years ? And its interest rate ?
My husband and I have a trust to avoid probate. Can we each purchase $10,000 in I- Bond for a total of $20,000 in our trust for this 1 year period. I couldn't find that information on the Treasury Direct site. Would we have to make 2 separate purchases and make the trust the owner? I am very confused about how to do that.
each trust can only receive $10k max per calendar year. You could each set up a revocalable trust just for the purpose of buying i bonds (other youtubers have mentioned they did this) and purchase $10k for each revocable trust. the i bonds are purchased in the name of the trustee. realistically, though, since you are able to designate beneficiaries for the i bonds, avoiding probate is a moot reason to purchase i bonds under a trust.
As Han answered, 10k max per trust per calendar year.
Can I convert my very old EE savings bonds to I-bonds without the restrictions of buying $10,000 per year? That’s assuming I can find them….
you cannot directly covert ee bonds to i bonds. You can cash out ee bonds to purchase i bonds, but you are subject to the $10k purchase limit.
@@hanwagu9967 Thanks for helping to answer so many questions while I had been away!
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!
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!
so if i put 1000 dollars in an i bond. i would be earning 96 dollars per month? or is this rate an APR?
You are my second Opinion! Thank You!!
Thank you--I appreciate that! I'm thinking we must've been on the same page 😊
Financial Education is so important. Thank you for the videos.
Totally agree! Thank you so much for taking the time to comment 🙂
How do you get ibonds with your taxes
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)
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.
Very well described
Thank you very much for the comment 😊🙏
Thanks. I didn’t know about the trust criteria. $40k it is!!
Thanks for the informative video. You mentioned it's 9.62% per month but isn't it an annual rate i.e. you earn 9.62% per year so you would earn 962$ 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 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.
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.
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.
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).
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
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!
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
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.
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?
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.
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
Thanks for the info. Im 28 and have been a saver since I was 18. I wish I had an interest in investing sooner
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%.
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
Can both spouses contribute 10k each into their living trust or is it limited to 10k total?
10k each, if you file separate. You can actually exceed 10k, but I'm pretty sure it's only by directly depositing your federal tax return.
@@jasonfulk4935 living trust has nothing to do with filing.
you can only contribute $10k per calendar year into each separate trust. If you have a joint trust, then the limit to that trust is still $10k. if you each have individual trusts you can contribute $10k to each trust.
@@hanwagu9967 Thanks Han for answering this question...10k/trust/calendar year.
Clearly many analysts and economists were wrong about May 2020 being the peak of inflation. What is rate if you buy now- February 2023.
Great video 👍
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
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.
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.
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.
Question: the 1 year limit of not able to withdraw cash is for the account opening or deposit? Meaning: if I put in 10k 2nd year: do I have to wait 5 years from 2nd year for that 2nd 10k money? pls clarify. Thank you
Good question, it would be based on when you bought the bond. Unlike other types of accounts where you you put in or add new money to an account balance, with I bonds you're actually buying a new bond each time you add money. So to answer your question, in the 2nd year when you buy a new 10k bond, you would have to wait 5 years from that date. Does that help to clarify?
@@HealthyWealthyandWise yes. Thank you so much.
@@AshokAlluri Sure thing! And thank you for taking the time to comment 😊
@@HealthyWealthyandWise Question: Is the 9.62% monthly? meaning: if I put 10k in the bond: at the end of 6 months: my total is $10481? Is my understanding right? Thank you
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
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
I am an American living in Thailand. I have been trying to buy them but I need to get their form wants a stamp that is only available at banks in the US. I verified this at the US embassy here. Is there a work around? Thanks!
It's a great question...however unfortunately .unless you're able to get them electronically on Treasurydirect.gov, I don't have an answer for you. Hopefully someone else may see your question and reply.
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
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.
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.
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,
Very well explained, thanks
Thank you so much! I really appreciate you taking the time to comment!! 😊
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.
Thanks for the video!!! It is very helpful. When I check the TD web, it does not specify how much I can buy ibond as a gift to someone. It only mentions I can only gift $10,000 to someone each year. Does it mean I can buy, for example $50,000 ibond to my wife as a gift this year and deliver to her $10,000 per year for the next 5 years?
yes, you can purchase basically unlimited i bonds as gifts and keep them in your "gift box" until you deliver. So, you could both hold a bunch of i bonds in each other's gift boxes for each other as recipient, and then every january 1st delivery each other the $10k gifts for however many years worth of $10k you purchase. Remember, though, that an individual ssn can only purchase and/or receive $10k every calendar year. So, if you gift each other $10k January 1, 2023, you could not buy another $10k under each ssn, or if you bought $10k under each ssn on January 1, 2023, you could not gift each other another $10k. The benefit of buying now and holding in your gift box are twofold: first, even though you haven't delivered the gift, the i bonds in the gift box still accrue interest from when you purchased the i bond, so you could be earning 9.62% on all the i bonds currently; second, the 1 yr lock out clock starts when you purchased the i bond gifts not when you delivery the gift. So, if you bought i bond now in August 2022 and gifted each other January 2023, you each would only have to wait until Aug 2023 anniversary to be eligible to cash out that gifted i bond. The major negative is that you are unable to touch the i bonds in your gift box, even for an emergency. They are stuck there until you deliver them as gifts. So, it's not really a good strategy if you need the money at any time or for the long term, based on index out performing i bonds in the long term.
@@hanwagu9967 thank you so much for your explanation, appreicated.
Thank you! It looks like you already got a good response!!
I don’t understand. If inflation drops to 0. I still would get 4.8%. Why is that. Thanks for your help
9.6% guaranteed for first 6 months and 0% for second six months ( worst scenario) gives you compound annual interest of 4.8%. Hope it helps.
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!
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