I realize that’s the result of our borderline hyperinflation, but it was quite a pleasant surprise for me. Back in my working days, I bought a bunch of them, and needed to cash one in and found this out.
I really hated to do that, but I need the money now.
Just an FYI.
I don’t know a ton about it but I’ve been hearing of it.
My understanding is you can put 10k a year into them. How long will they hold that interest rate?
It’s widely variable. For a while, I was earning literally 0% interest, but they cannot lose value AFAIK.
I know that these aren’t as popular as they once were.
Seriously?! I know they have two components that make the rate, last I looked it up a few weeks ago mine was like 4.??% Must’ve just went through an adjustment. CPI index iirc.
I was curious, so I looked it up.
This PDF chart shows the rates. The fixed rate is still 0.00% but the variable rate is 7.12%.
This rate is good for 6 months from purchase and then recalculated every 6 months and can go to 0.00%
You must hold for 1 year, and if you withdraw before 5 years you lose the last 3 months of interest.
So, if I understand correctly, if you invest today and hold for just one year, the worst you can do is 3.06% for the year.
Wow, thanks. I just invested.
I bought a bunch of those back in 2001 or something when the base rate was as high as 3.4%, so I guess they’re earning over 10% this period. Wow!
That’s fantastic for a zero risk investment! Which I would’ve bought back then.
I was working with a guy who was all about inflation protection and he convinced me to buy these. Smart investment!
Can this be done online, via Treasury Direct?
Yes, but you have to create an account. You can do a direct transfer from your checking account, but you probably already know that.
That’s the only way they’re doing it now.
I thought I saw an option for a paper purchase, but I was skimming. I’m thinking of liquidating my bank CDs and putting it all into the I-bonds.
I read that you can purchase 10k online and another 5k of paper bonds when you’re filing your tax return.
So what are the potential downsides? Like anything else, there has to be some.
With the base rate being zero there is potential for the absolute rate to be zero. Not really a bad downside as there’s no real way to lose money. If you cash out before 5 years and lose 3 months of interest, well, three months of 0% interest is no loss at all.
I just found out that you can only purchase up to $10,000 in a calendar year.
Unfortunately, I’m stuck. I created a Treasury Direct online account a couple of weeks ago. The account was “created” just fine, but immediately locked by Treasury, saying they couldn’t “verify my identity” (I supplied everything they asked for, including my driver license info).
They required I fill out a simple form and get a “signature guarantee” from a financial institution. This is when the trouble starts.
My bank, Wells Fargo, said they no longer do signature guarantee stamps, for any customer for any reason. My credit union, fairly large as CUs go (with multiple branches), said they do signature guarantees, but not specifically to open an account (presumably, they do it for guaranteeing funds).
Both institutions looked over the form and accompanying one page instruction and gave it consideration, but the net result was no-go.
So, apparently, no savings bonds for me.
(yes of course I can leave the bank I’ve been at for decades where all my bill pay is set up and safe deposit box yadda yadda to spite them)
Man, that sucks. Banks are always all about you until you need something free.
Wells Fargo has been a horror story for quite a few years, so I’m not really surprised.