Treasury Sold $3.4B in I Bonds This Week as Investors Rushed to Get 9.62% Rate | Hacker News Reader

Treasury Sold $3.4B in I Bonds This Week as Investors Rushed to Get 9.62% Rate

wsj.com

41 pointsmfiguiere24 comments

The 9.62% rate is for the six-month period, after that it's probably falling to 6+%, which is still better than anything else you'll find out there in terms of inflation-proofing cash. But it requires a five-year commitment, with a minimum of 12 months before you can pull your money out, but you'll lose the final three months of interest if you pull your money before five years. $10k per SSN with no household limit.

I believe today (28th) is last day to pull the trigger on this.

I Bonds make sense if you have a bunch of cash like an emergency day fund sitting in a savings account. In theory at these rates you can inflation-proof more than 10k by putting only 10k in. I think if you had a 20-30k emergency fund, I Bonds make a lot of sense. But if you have 20-30k sitting around for project work in the coming year (where you need access to the cash), it isn't really a good fit.

Also not really a good fit for anything you're actively planning to trade or invest with. If you're expecting stocks to drop and holding cash so you can pick them up cheaper later, I-bonds don't work for that; you won't be able to access the cash when you want to re-enter the market.

You're only completely locked in for the first year. From year 2 through year 5, you can cash in at any time, but lose the last 3 months of interest. After that, you're free to cash in whenever without penalty, or it will be automatically cashed in after a total of 30 years.

https://web.archive.org/web/20221028091214/https://www.treas...

(I'd link to TD directly, but it looks like it's being hammered right now.)

That's still not a great deal for people looking to preserve capital and invest after a crash. It's very likely that the worst of the market declines will be within the next year. Markets are forward-looking, so once they realize that there will be long-term economic pain, they correct quickly. Oftentimes the steepest stock recovery is during the worst of the unemployment pain.

Does it only fall one time to 6% in 6 months or will it track against inflation over time?

(i.e. short-term return > long term return?)

It tracks a certain calculation of inflation. There are youtubers who can calculate it out very precisely. But in general terms it tracks inflation, and resets every 6 months.

Every six months the rate changes. The rate of an I Bond is called the “combined rate”, as it’s based on a formula using an annual fixed rate and a semi-annual inflation rate. The formula is [fixed rate + (2 x semiannual inflation rate) + (fixed rate x semiannual inflation rate)].

The fixed rate has been and probably will remain 0%. The inflation rate is what has been fluctuating, and gets set every 6 months.

For people talking about the virtual password keyboard on TreasuryDirect, you can make a bookmark with the contents

javascript:(function(){document.querySelector(".pwordinput").removeAttribute("readonly")})();

and click that when you're on the password prompt to make the password field keyboard-fillable. It's a hack and we shouldn't have to do it but it's still helpful

I put my $10k in.

This site is indeed pretty awful and I couldn't find an answer to this question: When getting returns, are these going to auto-deposit into the account I linked to buy it, or should I make a note to log in once a year to withdrawal those funds?

Right on the main website:

When do I get the interest on my I bond?

With a Series I savings bond, you wait to get all the money until you cash in the bond.

Electronic I bonds: We pay automatically when the bond matures

(if you haven’t cashed it before then).

Paper I bonds: You must submit the paper bond to cash it.

See Cash in (redeem) an EE or I savings bond.

https://www.treasurydirect.gov/savings-bonds/i-bonds/

Thanks! I guess the site broke my brain and I missed that.

Compare with 4.5%+ on CD’s. [1]

[1] https://www.schwab.com/cd-rates-test

Or a bit over 4% percent (annual) on 6month T bills also on treasury direct

How does the average joe go about buying I Bonds?

Treasury Direct

treasurydirect.gov

be prepared to a bit frustrated with the UX

Yeah, I think their portal to create an account got the hug of death, unfortunately.

On the contrary, it's lovely. And there are no ads.

Entering your password by clicking a virtual keyboard with a mouse is anything but lovely. It's actually quite insane, when you consider the year we're in.

But also, just to be fair, the rest of the site has decent UX.

except the back button breaks it and logs you out, at least when I bought mine.

Which is for non-average Joes too :-)

That is the only place you can buy I Bonds. They aren't marketable securities you can buy and sell anywhere else.

You can also buy them (an extra $5k) when you send in your tax return but it's kind of a messy process

So what happens next year if a Republican House refuses to raise the debt ceiling?

The government will default from the massive increase in interest payments.

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