Gyroscopic Investing

I want to file my tax returns by their initial April 15th deadlines, next Wednesday. I also want to make any final payments necessary by the same date.

I also generally use the opportunity over-pay so as to make a down payment on the current year's estimated taxes.

This time around I also want to over fund so as to create a refund to be used to purchase the maximum amount of IBonds.

As I single person with NO trusts that limit is $5,000 plus another $10,000 via a tax refund?

I have a personal EFTPS. I assume it is the same as when I use it to pay payroll taxes. I place the request the day before it happens.

I know financial markets are closed today. Don't know if for EFTPS purposes, today is or is not considered a business day. If it is I can make request today for a payment Monday. Otherwise I need to make a request on Monday for payment on Tuesday. I like to leave some breathing space in case some thing goes wrong and I have not time left to fix it.

I assume I need to have a Treasury Direct account to do this? It's something I may have already set up years ago and never used.

What is the missing link between getting the money from a tax return refund to an account at Treasury Direct.

As you can see this is ALL new to me and just what I've gathered and remembered from all I've read here regarding IBonds.

Thanks

Vinny

Vinny,

1. The authoritative answers to all your questions about buying I-bonds can be found at:
https://treasurydirect.gov/indiv/resear ... s_ibuy.htm

2. You can buy $5,000 in paper I-bonds annually with your federal tax refund. You can buy $10,000 in digital I-bonds annually through your Treasury Direct account online.

3. The same Treasury Direct website explains how to convert your paper I-bonds to digital, if you wish. I buy both kinds of I-bonds, but prefer the paper variety. I keep them in my local bank safe deposit box and can cash them through my local banker, who does so without charge.

jhogue wrote: ↑Fri Apr 10, 2020 11:03 am Vinny,

1. The authoritative answer to all your questions about buying I-bonds can be found at:
https://treasurydirect.gov/indiv/resear ... s_ibuy.htm

2. You can buy $5,000 in paper I-bonds annually with your federal tax refund. You can buy $10,000 in digital I-bonds annually through your Treasury Direct account online. There is no "link" between the two programs.

Thanks for the quick response. Have that link now open.

The link I was referencing was how does a refund on your tax return get directed to Treasury Direct? I'm only familiar with the refund coming back to you or you applying it to your next year's taxes. Is there a line on the tax return that I've never noticed?

Vinny

See the FAQs. It explains how to convert paper I-bonds to digital I-bonds.

There is no way to directly convert paper I-bonds to digital I-bonds on the federal tax return form. You must do it separately.

jhogue wrote: ↑Fri Apr 10, 2020 11:19 am See the FAQs. It explains how to convert paper I-bonds to digital I-bonds.

There is no way to directly convert paper I-bonds to digital I-bonds on the federal tax return form. You must do it separately.

Read all here:
https://treasurydirect.gov/indiv/resear ... s_ibuy.htm

And here: https://treasurydirect.gov/indiv/resear ... eature.htm

Those answered certain questions I had and was not all that much to read.

Now I am about to read this: Convert Your Paper Savings Bonds Using SmartExchange

https://treasurydirect.gov/indiv/resear ... geinfo.htm

I've never owned an individual bond in my life. Therefore the basic question. I buy $5,000 worth via my tax refund which then results in them mailing to me paper bond(s). Are these bonds like cash? That is, if I have a fire in my house and they get burned there goes my investment? Or, are these somehow registered and I'd have to go through of hoops to get a new one issued but, at least, it'd not be a loss?

I've also never had a safety deposit box as I've never prior had a need for one.

Vinny

vnatale wrote: ↑Fri Apr 10, 2020 3:45 pm

jhogue wrote: ↑Fri Apr 10, 2020 11:19 am See the FAQs. It explains how to convert paper I-bonds to digital I-bonds.

There is no way to directly convert paper I-bonds to digital I-bonds on the federal tax return form. You must do it separately.

Read all here:
https://treasurydirect.gov/indiv/resear ... s_ibuy.htm

And here: https://treasurydirect.gov/indiv/resear ... eature.htm

Those answered certain questions I had and was not all that much to read.

Now I am about to read this: Convert Your Paper Savings Bonds Using SmartExchange

https://treasurydirect.gov/indiv/resear ... geinfo.htm

I've never owned an individual bond in my life. Therefore the basic question. I buy $5,000 worth via my tax refund which then results in them mailing to me paper bond(s). Are these bonds like cash? That is, if I have a fire in my house and they get burned there goes my investment? Or, are these somehow registered and I'd have to go through of hoops to get a new one issued but, at least, it'd not be a loss?

I've also never had a safety deposit box as I've never prior had a need for one.

Vinny

Read enough in the conversion process to see that one MAILS the bonds to Treasury Direct. Scary sending them through mail and, of courses, that then entails expenses (your expense ratio) to spend more for a more secure delivery method. It does not seem to say something like, "Once Treasury Direct received the paper bonds it typically takes XXX to &&& days to convert them to digital.

Vinny

Vinny,

When I get the paper bonds, I photograph them, then immediately push the photo file to cloud storage, so I have documentary evidence that I had the bonds, and what the denominations and serial numbers are.

I prepare the manifest for conversion from paper to electronic. That's all on TreasuryDirect.

I use plain old regular 1st class mail to send them to Minneapolis. I don't worry about it... I have proof of ownership. If the letter gets lost, they can be replaced. I guess if I was concerned, I'd use Certified Mail. That's like $5, right? It's just overhead. You can only do it once a year, and you don't have to do it that often. I don't account for that amount of cost.

They are not cash - the names of the owners are on them.

From Houston, it only takes a couple or three days for me to get the email from Treasury that they got the bonds.

I might skip the 2021 conversions and wait until 2022, after a vaccine is out. The less mail traffic, the better for the persons on the receiving end.

i-bond manifesto,
written in part by top boglehead Mel Lindauer

https://retirementincomejournal.com/art ... ?pdf=13017

The I bond Manifesto is a great idea, endorsed by four real experts in riskless fixed income investing. I would add a couple points:

-Because of the $10,000 cap on annual purchases, I bonds work best as part of a long term accumulation strategy. The longer you hold them, the better they get due to the combined effect of 30 year tax deferral; exempt from state and local taxes; and semi-annual compounding of interest. That’s why they call them U.S. SAVINGS BONDS, people!

-It also helps to have a well-thought out de-accumulation strategy. If you have to redeem some of your I bonds, sell those with a 0% fixed interest component first; and keep those with higher fixed interest rates for last. Also, my local banker reminds me that if you need to redeem a pile of paper bonds at once, it makes good sense to schedule an appointment a day in advance, because of the paperwork that they have to submit to the US Treasury. That should insure you get next day access to your cash at your local bank. Redeeming electronic I bonds from your TreasuryDirect account may be slightly quicker, but probably only by a day or less.

Don't know if it's been posted here before but this site is courtesy of Bogleheads member Numbers Cruncher:

http://eyebonds.info/ibonds/home1000.html

That's 23 years and counting of I-Bond data.

https://www.marketwatch.com/story/this- ... eid=yhoof2

Another prediction of over 6% coming to I bonds Nov 1st.

Seems like a no-brainer if you can scrape up cash.


Just dreaming, if I could go all in at 6% for next 30 years I think I would take it over gold or stocks.

whatchamacallit wrote: ↑Tue Oct 05, 2021 10:43 pm https://www.marketwatch.com/story/this- ... eid=yhoof2

Another prediction of over 6% coming to I bonds Nov 1st.

Seems like a no-brainer if you can scrape up cash.


Just dreaming, if I could go all in at 6% for next 30 years I think I would take it over gold or stocks.

Thanks for posting that. Just not sure I agree with this part:

"If you’re considering I bonds, I would suggest waiting until Nov. 1, when the interest rate will reset to a much higher level."

I mean, if you buy I-Bonds today, you would still get 3.54% for six months and then the (presumably much) higher rate for the following six months, right? Our remaining EE-Bonds are maturing over the next 16 months and we are replenishing with I-Bonds. The $10,000 minimum per person (no trust, no paper bonds) is not a deterrent for us as we have never been big earners and I-Bonds represent a decent chunk of our portfolio.

Yes. It is all a matter of timing. Any existing bonds will get the 6% rate for at least 6 months. Lets say you have a Jan 2021 bond then that 6% will start in Jan and run for six months. (or may it will start in Feb...but regardless 6% for a period of 6 months)

I guess just a dream as well but I want to hold out to see if there is a juicy fixed rate Nov 1st.

Not likely to be one but I can dream.

barrett wrote: ↑Wed Oct 06, 2021 7:00 am Thanks for posting that. Just not sure I agree with this part:

"If you’re considering I bonds, I would suggest waiting until Nov. 1, when the interest rate will reset to a much higher level."

I mean, if you buy I-Bonds today, you would still get 3.54% for six months and then the (presumably much) higher rate for the following six months, right? Our remaining EE-Bonds are maturing over the next 16 months and we are replenishing with I-Bonds. The $10,000 minimum per person (no trust, no paper bonds) is not a deterrent for us as we have never been big earners and I-Bonds represent a decent chunk of our portfolio.

Yea, I'm thinking the author had a brain shart. It would be pretty nifty to get a fixed rate on I-Bonds at some point.

A good way to think of I-Bonds is something that provides no real increase, only nominal as most of their yield is tied to CPI. It used to be you got an investment yield + a CPI tied yield; however, the investment yield part has been minimal to zero since interest rate suppression began.

whatchamacallit wrote: ↑Wed Oct 06, 2021 9:51 am I guess just a dream as well but I want to hold out to see if there is a juicy fixed rate Nov 1st.

Not likely to be one but I can dream.

With "juicy" defined as > 0.

At least, that is one reason I'm waiting to put in a little more.