Time to buy I bonds!!

[disneysteve]

Now would be good time to invest in I Bonds - USATODAY.com

Bonds bought between now and the end of the month (I know, that only gives you a few days to do it) will earn 4.28% from now through October and then jump to 6.06% for the 6 months after that.

[PauletteGoddard]

And the time to open an account and wait for an Access Card would have been close to two weeks ago, according to the Treasury Direct automated e-mail I just received. So much for expecting the Web to weave wonders. I guess I have to go buy the I bonds in person before Wednesday, as Treasury Direct won't let me do anything right now.

[ScrimpAndSave]

That is interesting...I never even thought of bonds...I am still learning about mutual funds.

[sweeps]

Don't forget the 3 month penalty if you cash out before holding for 5 years. And the minimum 1 year holding period.

[Dixiechick]

Originally Posted by disneysteve

Bonds bought between now and the end of the month (I know, that only gives you a few days to do it) will earn 4.28% from now through October and then jump to 6.06% for the 6 months after that.

Bought the max allowed - $5k (really, it's a savings plan I have going for my son towards college expenses). I'll hold them for at least 15 months and then see what the rates are like then before cashing out, if I do...

Also, these can be bought at banks and credit unions, I've been told. I buy mine from TreasuryDirect. But I have my access card.

Good deal considering the lousy savings and CD rates out there...

[ScrimpAndSave]

I'm new at this...can you tell me the difference between a bond and a CD?

Thanks!

[LuxLiving]

We've been buying a bit all along since they started offering the I-bonds.

[scfr]

Just a friendly reminder that anyone can open an account with Treasury Direct, even if you're not planning to purchase a treasury right away. Might not be a bad idea for the savers in the group to have a Treasury Direct account open and "on standby."

Just go to TreasuryDirect

We've had an account for 10-1/2 years now, and monitor both CD and Treasury rates when deciding where to put short-term cash.

The account is harder to set up or make changes to than an on-line bank account. For example, when we changed our linked bank account we had to get a signature guarantee. Yes, it was a pain in the you-know-what, but honestly it was in the name of account security so it was worth it. Once the account is set up, purchasing a Treasury is a snap.

[disneysteve]

Originally Posted by sweeps

Don't forget the 3 month penalty if you cash out before holding for 5 years. And the minimum 1 year holding period.

Both true, but keep in mind that depending on your situation and the interest rate trend, even if you cash out before 5 years, you may have earned more than enough on the bond compared to a CD or MMA that the 3 month penalty won't matter.

Also, if you time your purchase correctly, that 3 month penalty becomes only a 1 month penalty. Here's why. When you buy a bond you get credit for that entire month whether you buy on the 1st or the 31st. When you redeem a bond, you get credit for the entire month regardless of the redemption date. So buy your bond at the end of a month and redeem your bond at the beginning of a month and you really only lose 1 month worth of interest.

[disneysteve]

Originally Posted by ScrimpAndSave

I'm new at this...can you tell me the difference between a bond and a CD?

Thanks!

A CD is sold by a bank, credit union or brokerage. It typically has a fixed rate (though there are some creative ones out there) and a fixed maturity. Most can be cashed in early, if needed, and you forfeit some of the interest in the process.

Series I savings bonds are sold by the US government. They have a fixed rate component that is set for the life of the bond and a variable rate component that adjusts every 6 months based on inflation. You must hold them for at least 1 year and there is a 3-month interest penalty (see my previous post about trimming this to a 1-month penalty) if you redeem the bond in less than 5 years.

There are tax advantages to bonds. You don't have to pay taxes until you redeem them. I believe they are free of state taxes. Also, there are provisions for avoiding the taxes if you redeem them to pay for college costs.

You can learn more at savingsbonds.gov.

[rennigade]

I plan on getting an I bond tomorrow. That's a high rate considering emigrant is now 2.75.

[cashqueen]

Ok, so I should be able to go to *any* bank or credit union and buy these?

[cashqueen]

Darn, I called my credit union and I can't buy them there. I'm assuming I should be able to go somewhere else even if I don't have any account there?

[sweeps]

Originally Posted by cashqueen

Darn, I called my credit union and I can't buy them there. I'm assuming I should be able to go somewhere else even if I don't have any account there?

Treasury Direct

[cashqueen]

Originally Posted by sweeps

Treasury Direct

Thanks, but I think a pp said there is a 2 week wait to get an access card so I'll have to buy them in person.

[sweeps]

Just about any major bank should sell them (I assume some commission will be required though.) Plus supposedly you can buy them directly at a Federal Reserve bank or branch.

[disneysteve]

I bought mine at my bank. I think it was Fleet then but is BoA now.

[LuxLiving]

We buy at the local bank as I like to have mine in my hot little hands. Takes about a week for them to mail it to you.

[fruitbowlk]

Originally Posted by sweeps

Just about any major bank should sell them (I assume some commission will be required though.) Plus supposedly you can buy them directly at a Federal Reserve bank or branch.

no you can not.

[sweeps]

Originally Posted by fruitbowlk

no you can not.

Hmm, well I did some further searching and Morningstar says while you can't walk up to a FR bank or branch, you can buy by phone or mail.