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Post by Admin/YBB on Nov 28, 2021 15:35:21 GMT -6
I had EE Bonds when they were good but they matured - and the EE Bonds are bad now. I had 10-yr TIPS when there were good (base rates 3.25%+) but they matured too. These were with the old paper system & I never opened a Treasury Direct account. So, now I-Bonds are good but I am running into these signup issues. If something looks good, I go for it.
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Post by anitya on Nov 28, 2021 17:12:26 GMT -6
Thanks. I will just follow you into it - the opportunity cost is low and the amounts are small. My crystal ball says a lot depends on the path of Covid which I can not project. I am not good at predictions anyway. Given that we are buying now, it reasons to believe we should buy again in January. Agree?
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Post by anitya on Nov 29, 2021 12:51:11 GMT -6
The question of when Treasury Direct draws money from our linked bank account for a new buy is answered this morning. My buy date is today but I placed the request Saturday night. Money was withdrawn from my bank account at 5:13 AM PST this morning. That is pretty much as soon as the banking hours began. Placing a future buy request appears to cause a withdrawal from the linked bank first thing on the purchase date.
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Post by anitya on Nov 30, 2021 14:18:23 GMT -6
Here is an email correspondence with Treasury Direct re the day of ownership (for purposes of earning interest).
My Q: Is the day of purchase and the day of redemption of an Ibond considered the day ownership? For example, if an ibond bought more than 10 years ago were to be redeemed on the first day of a month, until when does interest accrue on that bond? Similarly, if one were to buy an ibond on January 31, 2022, would the bond accrue interest for the month of January 2022? Thank you.
Treasury Direct reply: You would go by the Security Issued date that is shown under your History tab then Security History. You do not go by the date you requested the purchase. There is generally 2-3 days difference from the date you request a purchase to the date the security is issued. This is to allow time for it to go through to your bank account on file to ensure the funds are there.
Generally, the best time to redeem a savings bond is at the same time it increases in value. Because all savings bonds increase in value on the first day of the month in which the interest is due to accrue, you may cash the bond(s) anytime during the month to receive that month’s interest payment. The interest on savings bonds is calculated by month, not by day. [Italics and blue font added] Series I bonds earn interest monthly, and the interest is compounded semiannually.
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I checked the History in my Treasury Direct account this AM. The IBond purchased yesterday (see earlier posts) already is included in there with a issue date of 11.01.2021.
The highlighted text in their reply appears to imply that one gets the interest for the entire month of redemption. I sent a reply for clarification and will post there reply here.
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Post by Admin/YBB on Nov 30, 2021 14:35:06 GMT -6
Thanks for verifying this from Treasury Direct.
It is also behind the general recommendation mentioned earlier in this thread to buy Savings bonds late in the month but cash them early in the month.
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Post by anitya on Dec 1, 2021 12:59:33 GMT -6
My follow up Q to TD: Referring to the highlighted sentence in your reply [see text in italics in previous post], assuming I have owned the iBond for more than 5 years, am I correct that if I submit a redemption request any time on the first day of a month, I would still receive interest for that entire month? Is there a particular time of the day on the first day of a month when interest is accrued / savings bonds increase in value? TD Reply: What interest you would be receiving would be for that month. When you redeem the security on the first day of the month in which the interest is due to accrue; which would be exactly the same interest if you redeem it on the 2nd day or the last day of that month. There is not time that is set on the 1st of the month that the interest would accrue. _____________________________________________ I do not think they answered the first question definitively - may be they employ apprentice lawyers to write these replies! However, I am deducing that one receives interest for the entire month of redemption. If so, free gift. If not, no big deal. If your idea is to redeem on the first day (rather than the second day) of a month, my suggestion is check the bond balance on the last day of the previous month and again on the first day of the month to make sure interest is posted (should be a different balance). The other alternative is to use the paper bond calculator (assuming it continues to work when you need it) treasurydirect.gov/BC/SBCPrice (copy/paste?). I checked my account at noon EST today using the calculator and interest is posted into my account (security) balance on this first day of December. However, note the Treasury's disclaimer re the calculator - "The Savings Bond Calculator WILL NOT: Give correct values for electronic bonds. The Calculator is for paper bonds only. For values of your electronic bonds, log in to your TreasuryDirect account."
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Post by chahta on Dec 3, 2021 2:45:26 GMT -6
How does one practically use the interest? Must a complete bond be cashed in or can a check or direct deposit be issued for interest only?
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Post by Admin/YBB on Dec 3, 2021 8:23:53 GMT -6
As for cashing them for income, buy smaller denominations (smallest $25, largest $1,000), so that appropriate amounts can be cashed; for example, there is no provision for partially cashing $1,000 Bond (that will go up in value beyond $1,000). chahta, Savings Bond interest cannot be taken separately but is added to the Savings Bond. As mentioned earlier in this thread (see the quote above), a practical way is to buy them in small/medium denominations and then cash them as needed.
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Post by Admin/YBB on Dec 6, 2021 13:22:46 GMT -6
Finally, got my Treasury Direct Signature Guarantee hold removed and I bought I-Bonds. Took 4+ weeks from starting my Treasury Direct Application. anitya , electronic bonds can be bought in any amount between $25-10,000 in penny increments*. Discrete amounts ($25, $100, $200, $500, $1,000) apply only to paper bonds, not to electronic bonds. The legacy Savings Bond Calculator assumes multiples of those discrete purchase amounts (entries require purchase denominations, number of bonds, months of purchase; there is box for entering bond number but that is optional and only for personal recordkeeping). If one bought other than those amounts of electronic savings bonds, one would just have to adjust/scale the values given by the legacy Savings Bond Calculator for discrete test values. Of course, login to Treasury Direct account will provide correct current values. * My impression that discrete amounts for paper bonds would apply to electronic bonds too wasn't correct. It says so clearly in the online guide but I didn't pay attention until now. treasurydirect.gov/savings-bonds/i-bonds/" What do I bonds cost?You pay the face value of the bond. For example, you pay $50 for a $50 bond. (The bond increases in value as it earns interest.) Electronic I bonds come in any amount to the penny for $25 or more. For example, you could buy a $50.23 bond. Paper bonds are sold in five denominations; $50, $100, $200, $500, $1,000." The same applies to selling of electronic bonds, treasurydirect.gov/savings-bonds/i-bonds/" How much can I cash at one time?Electronic bonds in TreasuryDirect You can cash a minimum of $25 or any amount above that in 1-cent increments. If you cash only a portion of the bond's value, you must leave at least $25 in the TreasuryDirect account. Redemptions are comprised of principal and interest. (In a partial redemption, we pay interest only on the partial amount you cash.) Paper bonds No general limit exists for the total value you may cash in a single transaction. However, banks have varying policies on how much they will cash in one transaction (and some banks may have a policy to not cash savings bonds at all). Note: Individual paper bonds may not be split and must be cashed in full." chahta , so you can cash any amount in electronic Savings Bonds (unlike paper bonds) but the amount would include principal plus interest.
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Post by Admin/YBB on Dec 8, 2021 10:31:14 GMT -6
Now they say that the secret is out 😎 . www.bloomberg.com/opinion/articles/2021-12-07/the-secret-is-out-on-7-12-inflation-protected-bonds"In fact, the government-guaranteed, inflation-protected securities are now among the hottest assets around. The Treasury disclosed that it issued $1.312 billion of Series I bonds in November, according to data released late Monday. That’s by far the most on record since the department began breaking out monthly totals eight years ago. Considering that individuals are limited to buying $10,000 a year, 1 that suggests at least 131,200 people sought out the debt, on top of the hundreds of thousands of Americans who had already made their yearly purchase earlier in 2021. "
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Post by Admin/YBB on Dec 28, 2021 15:25:07 GMT -6
Treasury Direct website allows order entry in excess of the annual Savings Bonds limit - there are no warnings or flags. People have reported elsewhere that they entered orders for excess by mistake that were accepted but then they cancelled the pending orders.
So, I asked Treasury Direct about such excess orders and its response was that those orders for excess would be cancelled eventually and the money refunded into the linked account.
It would be simpler to program the website so that such orders for excess aren't accepted in the first place.
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Post by Admin/YBB on Jan 3, 2022 8:49:45 GMT -6
For a Treasury Direct order placed over the weekend, I expected that transaction will be done today, Monday, 1/3/22. But I was surprised that BOTH the purchase AND withdrawal from the linked bank account were posted as of 1/3/22 MORNING. I was thinking that purchase may be posted by the end of 1/3/22 and withdrawal done on 1/4/22 - NOT SO!
Remember to have money in the liked account ahead of entering Treasury Direct orders.
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Post by Admin/YBB on Jan 5, 2022 18:24:41 GMT -6
Following was posted at Fidelity Investor Community (a closed site, so no link possible) and Morningstar, community.morningstar.com/s/question/0D53o00005l2K1hCAE/i-bonds-1112143022I-Bond interest rate calculation for 2 examples, new purchase now and those purchased in 11/1999. Let us look at the formula used by Treasury Direct. Let b be the base/fixed rate (annual), f the semiannual inflation rate (so, annualized inflation is 2f), then use 6-month compounding and ignore squared-terms (so, the formula used by the Treasury is an approximation). Composite rate = (1 + b/2 + f)^2 - 1 = 1 + 0.25 x b^2 + f^2 + b + 2f + b x f - 1 Ignoring squared terms, Composite rate = b + 2f + bf ( This is used by Treasury Direct). Let us calculate the current rate for a new I-Bond purchased with 0% base rate (b = 0.00) and 11/1999 I-Bond purchased with 3.4% fixed rate (b = 0.034). Inflation now is 7.12% (2f = 0.0712) and semiannual inflation is 3.6% (f = 0.036). Then, the current rate for new I-Bond purchase is 0.00 + 0.0712 + 0 = 0.0712 or 7.12%, and, the current rate for I-Bond purchased in 11/1999 is 0.034 + 0.0712 + 0.034 x 0.036 = 0.106424 or 10.6424%; Treasury Direct shows 10.64%. Note that for the I-Bond purchased in 11/1999, the inflation rate used now is the current inflation rate (7.12%), not that was in 11/1999 (1.76%). treasurydirect.gov/savings-bonds/i-bonds/i-bonds-interest-rates/
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Post by Admin/YBB on Mar 14, 2022 19:34:23 GMT -6
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Post by anitya on Apr 5, 2022 13:15:39 GMT -6
I checked today for the interest added to my account for the ibond purchased in Nov 2021 (issue date Nov 1, 2021). I wanted to check if interest is being added for Nov and Dec on December 1. If that was the case, six months of interest should have been added on April 1, 2022 (Nov - April). To my surprise, the account showed the table below (i.e., interest accrued of $116), when I was expecting interest accrued of $356 (for six months) or at the least $296.67 (for five months). Can somebody pl clue me in?
Issue Date Interest Rate Status Amount Current Value 11-01-2021 7.12% $10,000.00 $10,116.00
Edit: edited to increase readability for others and myself when I revisit this thread in the future.
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