I'd appreciate thoughts on timing I-Bond purchases for next year. I plan to over-pay income taxes with my January 17th quarterly estimated tax payment to get a $5K paper I-Bond refund. Any insights on when might be an optimal time for purchases for my personal and trust accounts: purchase all in January or spread purchases through out the year?
Answers
The only long shot reason I see for investing in January is if you think the rules relating to buying these will somehow be changed with no warning and prevent you from an April purchase.
Start from your premises;
1.unless there is a crazy logistic of filing 1040-ES on 17th and 1040-IRS on 19th, you'd be giving interest free 3-months loan to US Treasury, that would cost you about 1% of the next year Unrealized Interest.
2. cumulative interest earned over 12 months period does not depend on the number of purchase, rate only changes twice.
your true answer is
"That depends on your personal expectations of changes in the fixed and inflation components of the composite interest rate", it is a little bit sketchy afterwards. No need to believe that "current fixed" rate of 0.40% will not change. it is an eternal fixed rate that will not change for the life of purchased Bonds, even when "current" rate is 0.004% or 1.4%. No need to believe "the next 12 months inflation", you will know by mid April 2023.
There is a need to understand that "the current composite rate of 6.89%" would not apply to your purchases.
The only certainty that would apply is the guaranteed return of about 3.55% over 12 months.
Because I agree "that party may be over" especially in the hype part of it, I'll be waiting for next April to make my mind and possibly to split 2023 purchases by end of April and end of May ones. Somehow I think that Inflation year-over-year rate will subside but fixed rate will be doubled to near 1%. That will make I-Bonds more difficult yet more intriguing proposition.
Have no idea now how to shed them before it terns into money losing purchase.
I wonder how TD restricts Gift Transfer where recipient registration is already maxed out. Who is going to get punished, Giftor or Giftee.
Wonder how TD can insist that Giftor must know Giftee allowance before gift turns into penalty.
"The gift counts for that person's limit in the year in which they get the bond."
there if recipient has made $9,950.00 of Bonds purchases already or received $9,950.00 of Bonds as gift in the year and you are attempting or delivering "no wrong $10K"!
What does TD do?
How would you know the limit of $50.00 to do "no wrong"?
When you know "that person's limit in the year" you can make an adjustment.
When you control "that person's limit in the year" you Choice is either make a Gift or make a Purchase. Once Purchase is made you would have to hold on "deliveries" till another year.
Common Choice, level with me!
Hard to imagine, but we all know how it suppose to work in theory. We know the theory because we try to take an advantage in real life. I know what you can control, because I control the same.
"The Q" was how it works in real life?.
In real life, If I want to Gift you I-Bonds, I would need to know your SSN number to create the registry and make a purchase. I wouldn't have an access to your TD Account, you'd hope.
In real life, when I attempt to deliver the gift and realized that you failed to share with me your phone number, or I don't want to bother myself talking to you(as a real life example) or decide to make a surprise gift (as another real life example). Who's fault is it going to be? Who gets the punishment, me as careless Giftor or you as unsuspecting Giftee?
No, but you'd still need to know their TD Account number in order to gift per the TD website:
https://www.treasurydirect.gov/savings-bonds/gift-a-bond/
"To give an electronic savings bond to someone else, you must know that person's
Full name
Social Security Number (or Taxpayer Identification Number)
TreasuryDirect account number"
Stupid Troll or poorly programmed Bot.
Speaks for Everybody on Every subject.
It is not your conversation, SHUT that Green Hole
Nobody needs "TreasuryDirect account number"
"to create the registry and make a purchase."
"Nobody needs "TreasuryDirect account number"
"to create the registry and make a purchase.""
I know you have trouble with the English language as the numerous typos and gabled grammar in your many pointless posts have shown, but TD makes it very clear you need the account number in order to *deliver* the gift, you can't make a "surprise gift" that puts someone over their annual limit without it (There's no "surprise" without delivery and an undelivered gift has no effect on the purchase limit), thus making all your questions about "who gets the punishment" for going over the annual limit moot if you don't have the account number!..
it insults now the definition of " publicly open forum".
Public means homo sapiens.
I'll let Public to decide if that is Homo..
and how much of this is Sapient.
GreenHole it is.
boringly predictable, poorly programmed and the use for nothing
ngcoogh.
Cannot tell you what to do. Am able to share my own plans:
Will be purchasing my first tranche ($10,000) close to the end of January at TreasuryDirect.
Like you will overpay my last estimated tax payment by enough to ensure availability of $5,000 for second tranche courtesy of Form 8888. Will then e-file my taxes ASAP thereafter in hope of beating May first rate reset.
I shall be buying my little share of them for the remainder of my life.
For savers in low tax brackets there may be no advantage to holding TIPs in traditional IRA accounts except that cash from some other source will not be needed to pay the annual taxes on the inflation growth (some call it “phantom” income).
if you intend to hold the I bond for the long term, getting a higher fixed rate becomes more beneficial. waiting on some I bond purchases until after the May and November fixed rate resets, hoping for more than 0.4% could payoff in the long run. unlike the inflation component, the fixed rate on the I bond is unknowable until it's announced.