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Now Is A Good Time to Buy Series I Savings Bonds!

FEE-ONLY PLANNING BLOG

Apr 18 2022

Now Is A Good Time to Buy Series I Savings Bonds!

By John H. Robinson, April 18, 2022

Over the past couple of weeks, a number of clients have asked me about whether they should take advantage of the recent jump in the interest rate paid on Savings Bonds. The short answer is YES. With the current low-interest rate world, exists a rare opportunity to earn more than 8% over the next 12 months on a government-guaranteed savings bond.

However, the deadline for purchasing I-Bonds to lock in the current rates is April 28th. That means time is of the essence. If you do not already have a Treasury Direct account that is linked to your local bank account, it can take a few days to get your account funded.

The Safe Investment That Will Soon Yield Almost 10% (Wall Street Journal)
I Bonds Offer Cash Plan As YIelds Top 8.5% Over Next Year (FA Magazine)
Don’t Let Inflation Eat Your Savings. I-Bonds May Soon Pay You 9.6% (CNET-Money)

LOGISTICS

Where to Buy: TreasuryDirect.gov
When: The deadline to purchase I-bonds at the yields described in the articles above is April 28th, 2022
Purchase Limit: $10,000 per person, per calendar year (i.e., per SSN)

FAQ

Can I get buy them through my bank or in my brokerage account?
Unfortunately, NO. Savings bonds have never been available for purchase in investment accounts, and purchases through banks ended years ago. For the most part, Savings Bonds must be purchased electronically (“Book Entry” form) through the Treasury Direct Website, although savings bonds can also be purchased via an election on your federal tax return or via certain employer benefits programs

Can I Purchase Paper I-Bonds?
The only remaining way to purchase I-bonds in paper/certificate form is to purchase with your tax refund. There is a limit of $5,000 for paper purchases in addition to the $10,000 Book-Entry limit, per calendar year.

Is it easy to set up an account with Treasury Direct?
To buy I-bonds, you must first establish an account with Treasury Direct and in my opinion, it’s not easy to set up an account. I found the process and the platform software to be poorly designed and dated. Worse, however, are frequent complaints from consumers about rejected applications due to the inability of the third-party company that the Treasury Department uses to validate account information. It is just my opinion.

How long does it take to set up an account?
It took me less than 10 minutes to establish my Treasury Direct account and link my primary checking account. However, it took 3 to 4 days to get the account funded so money is available to purchase the savings bonds.

Can I Buy For My Kids?
You may buy $10,000 for yourself. Your spouse/partner may buy $10,000. You may also buy $10,000 for each of your minor children and link their account(s) to your Treasury Direct account. Basically, there is a $10,000 calendar year limit per social security number. Adult children must purchase it themselves.

Is There a Catch?
Yes, there are several limitations to keep in mind. Here are a couple of important restrictions to keep in mind (1) You must hold the Savings Bonds for at least 12 months, (2) If you cash in your 12 months within 5 years of purchase, a 3-month interest penalty will be assessed.

Can I Link My Treasury Direct Account to Appear in eMoney?
YES.

RELATED READING
Buying Series I Savings Bonds [VIDEO] (Treasury Direct)
Buying Series I Bonds for your Portfolio (TheBalance.com)
What Are I-Bonds? (Forbes)

 

Written by Fee Only Planning Hawaii · Categorized: Financial Planning, Portfolio Management & Investing

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Copyright © 2023 · Financial Planning Hawaii
Fee-Only Planning Hawaii is a business division of Financial Planning Hawaii, Inc., a state of Hawaii Registered Investment Adviser (CRD#153930). John H. Robinson is the sole owner and founder of Financial Planning Hawaii, Inc. Both John H. Robinson and Laurey L. Shintani also maintain separate broker-dealer and investment advisory relationships with J.W. Cole Financial, a FINRA member broker-dealer, and J.W. Cole Advisors, an SEC-Registered Investment Adviser. Financial Planning Hawaii and J.W.Cole Financial/Advisors are unaffiliated entities. Services provided under Financial Planning Hawaii’s fee-only planning agreement are entirely separate from the financial planning and wealth management services provided under their unaffiliated registered representative and investment adviser representative relationships with J.W. Cole. Fee-only planning clients will NOT be solicited to establish investment accounts through J.W. Cole Financial or J.W. Cole Advisors. Clients who sign Financial Planning Hawaii’s fee-only planning agreement should understand that ongoing portfolio management is NOT part of the agreement.

Both John H. Robinson and Laurey L. Shintani maintain state of Hawaii insurance producer licenses. However, while insurance risk management is included in the financial planning review process, no specific insurance products will be recommended or solicited as per the terms of the fee-only planning agreement.

All prospective clients are encouraged to review John H. Robinson’s and Laurey L. Shintani’s professional and regulatory disclosure histories on the Securities Exchange Commission Investment Adviser Public Disclosure website (SEC IAPD) at https://adviserinfo.sec.gov/