Comments on: What are Series I Savings Bonds?

By: Cardo

Cardo — Mon, 25 Jul 2011 17:18:05 +0000

Union Bank of California has a 2.5%C.D. for 5 years for just starting with $1,000.00

By: Kevin

Kevin — Tue, 12 Jan 2010 08:39:08 +0000

Hi. At 37,which bonds do you recommend for myself? Long term Short term.. Can you also tell me which bonds are better for my 10yr old daughter? Thank you much….

By: KathyinMD

KathyinMD — Thu, 19 Nov 2009 00:41:12 +0000

Nickel, this is a terrific post with lots of clear information on something I’m going to start adding into my portfolio. I’ve had it on my “should I do this?” list since turning 35 (I’m 37 now). You answered almost all of my questions (I did follow up research on I bonds vs TIPS). I love that they have a 30 year maturity and that the interest accrues tax-free. Thank you for the information! This has spurred me into action!

By: Widders

Widders — Mon, 16 Nov 2009 20:19:09 +0000

I have $500 in gift to minors to invest for my $16-year-old. Would I-bonds be your recommendation for this purpose?

By: Nickel

Nickel — Wed, 11 Nov 2009 12:59:40 +0000

Connie: Correct, the fixed rate was 0.1% for bonds purchased from May-Nov 2009, and the inflation rate was negative enough to wipe that out (and then some). The variable portion has since adjusted (as of November 1) and those bonds are now paying 3.16% (0.1% plus the variable rate).

All I Bonds are subject to the same variable rate, they only differ in the fixed rate, which is set at purchase. As such, I Bonds bought earlier this year are slightly behind the curve, as the fixed rate was 0.1% vs. 0.3%.

As an aside, if you’ve owned your I Bonds for 1-5 years and the rate falls to zero again, you can simply hold for three more months at 0% and then cash them in (if that fits with your plan) and there won’t be a penalty (three months worth of 0% interest is $0).

By: connie mcmaster

connie mcmaster — Wed, 11 Nov 2009 12:23:26 +0000

What you haven’t mentioned in this article is the fact that any I bonds that were purchased before 5/01/2008 are at this time paying 0% interest rate. Does anyone know why this is when new purchases are paying 3.36% interest.

By: kitty

kitty — Tue, 10 Nov 2009 23:05:22 +0000

Arthur Levernier – I bonds aren’t the only bonds the government sells to borrow money (from China, US funds, anybody really). In fact, if you want to lend money the the US government on the same terms that China gets, you can buy the same bonds at auctions directly from the government or at secondary market through your broker – as many as you want. Here are the rates from the last auction: http://finance.yahoo.com/bonds As you can see over 3% is for regular 10 year bonds. These rates are NOT adjusted for inflation, so if there is high inflation you’ll still be getting 3.47%. Or if you need to sell them on secondary market before maturity they may be worth less; will worth less if there is inflation. Or if you want inflation protection, you can buy as many TIPs as you want.

I bonds are different – they are bought and sold directly from treasury and they aren’t traded at secondary market.

I bonds purchase’ limits are for everyone, including Chinese. Not sure why they introduced limits, but some bloggers wondered if the government is no longer interested in selling I bonds as they turned out more expensive for the government. Before 0% during last 6 months there was a period of around 6% if I remember correctly. But who knows what the real reason for the limit is.

By: Arthur Levernier

Arthur Levernier — Tue, 10 Nov 2009 22:27:31 +0000

Why are U.S. Citizens only allowed to purchase I Bonds $5,000.00 per S.S. number when our country needs money. Is it true that China borrows money from the U.S. and they receive 3% interest? Wouldn’t it be better for our citizens to be able to buy all the I bonds they want?

By: Manshu

Manshu — Tue, 10 Nov 2009 01:07:46 +0000

How do these compare to TIPS?

By: Jim

Jim — Mon, 09 Nov 2009 23:57:10 +0000

Not mentioned: interest on I Bonds is tax-free if used for college tuition (with some restrictions).

By: Des

Des — Mon, 09 Nov 2009 23:15:38 +0000

Not that it is a major threat, but it should be noted that if we experience deflation, these bonds can actually return 0%. I suppose 0% is better than losing money, but it is worse than even liquid savings. All Series I bonds ever issued paid 0% from May to November this year.

By: debtkid

debtkid — Mon, 09 Nov 2009 22:44:44 +0000

That does make them a pretty good alternative to CD rates, most 12 month rates aren’t 2.5%, so even with the penalty, a good option. Plus, with inflation indexing…hmmm, may have to look more closely at these!

By: Noadi

Noadi — Mon, 09 Nov 2009 22:01:30 +0000

I just recently signed up with Treasury Direct and look forward to getting a few bonds to start with. Having the money locked away with penalties if I touch it is a good incentive to keep it saved.

By: John DeFlumeri Jr

John DeFlumeri Jr — Mon, 09 Nov 2009 16:13:16 +0000

Never heard of these type bonds before. Glad you wrote aboth them, I will get some.

John DeFlumeri Jr