A good article about I-Bonds on on Yahoo!Finance

[MickinMD ★]

The 9.62% annual interest rate Series-I Savings Bonds that I mentioned a couple months ago would be earning over 9% in May, got reviewed on Yahoo: Here's what to know about Treasury I bonds.

There's a $10K calendar year limit but the article says "there are ways to ramp up that amount, such as using your federal tax refund to directly buy an additional $5,000 in I bonds. A couple filing a joint tax return can buy up to $25,000 per year."

Note that the Congressional Budget Office projects that inflation will fall to 3.1% by the end of 2023.  If that happens to the I-Bond rates, that's still likely to be a lot better than CD's.  I use CD's and I-Bonds for emergency and next-car money but put most of the rest in "safe" stocks so, over the long-term, I don't lose buying power of money to inflation.

I'm limited to $10K per year, so I bought $10K for 2022 and am putting 10K in 6-month CD's in June (the rates are going up then at my credit union) and, if CD's still have poor rates then, I'll wait until January and put another $10K in I-Bonds.

Note that I-bonds earn interest from the 1st of the month no matter when in the month you but them, so $10,000 bought from treasurydirect.gov by Tuesday, May 31, earns $80 in interest for May but if bought June 1, it loses May's interest.

I had bought I-Bonds at $50/month automatically through April and, thanks the nice check from State Farm that I deposited, I bought the remaining $9800 in I-Bonds that I'm allowed.  Below is a table cut-and-pasted from my treasurydirect.gov page of my 2022 I-Bonds, none of which was bought on the 1st of the month, but all earn interest from the 1st of whatever month they're bought.  They don't show any interest in their value until they are 4 full months old because there's a 3-month interest penalty if you redeem in less than 5 years and you can not redeem them for at least 12 months.

Note that the ones bought in Jan - Apr are still earning 7.12%: the bonds earn the rate when bought for 6 months, then the next rate for 6 months, etc.  So the Jan. I-Bond will earn 7.12% from Jan thru June 2022, then 9.62% from July thru December, then whatever interest rate the U.S. Treasury announces in November, 2022, will be earned for Jan thru June 2023, etc.

 

[Prophet Zacharia]

I’ll want to dive into this over the weekend while this is still time in May.

[Razors Edge ★]

On 5/27/2022 at 9:28 AM, MickinMD said:

The 9.62% annual interest rate Series-I Savings Bonds

They're still discussing I bonds as a hedge against inflation.  One interesting comment was a way couples can use "gifting" to get the HIGHER rate for twice the "limit" allowed per year.

I haven't puzzled through it completely, but if you assume this 9.62 type of rate is only gonna last a year or so before being reset back to more traditional levels, then you could bet on it by buying now, but delivering later.  It would require an additional $10k (or whatever) now, and the person receiving it couldn't buy anything new (or only up to the limit minus the gift amt) in the delivery year.  Still, with the relatively "low" limits, it isn't a huge play, but $40k (double a couples normal $20k) at 9.62 (and then the subsequent adjusted rates) is likely good vs $20k now & $20k  in a subsequent year, or, obviously, $0.  

Comments:

Although individuals are limited to purchasing only $10K in Series I bonds per calendar year, spouses can lock in the current high rates by "gifting" another $10K (or more) to each other. Gifted I bonds begin earning interest immediately as does the clock for the minimum one-year holding period and five-year interest penalty period. The gifted bonds are only charged against the annual $10K limit in the year they are actually delivered. Thus, for example, gifted Series I bonds that are purchased this month would earn the same interest as bonds that are directly purchased this month -- 9.62% compounded over the next 12 months -- and could then be "delivered" in July 2027 and redeemed immediately without penalty. Of course, neither you nor your spouse could directly purchase I Bonds in 2027 because the delivered bonds would be applied to the annual limit.

and

Both spouses can "gift" an additional $10K (or more) to each other even if they have already made a direct $10K purchase in the current calendar year. The gift is applied to the calendar year limit in the year the gift is actually "delivered" to the spouse. (It will show up on your TreasuryDirect account as a "gift.") A gift purchased now (for delivery in a future year) will earn the current yield (9.62% annualized) and will compound just like a direct purchase, and the clock for the one-year holding period and five-year interest penalty will also begin now. So, as I said, a $10K gift purchased now can be "delivered" in five years and it will have grown just like a directly-purchased bond and it can be redeemed immediately without penalty. However, the gift recipient cannot make a direct purchase in the year the gift is delivered because the gift will be applied to the $10K calendar-year limit.