Well. Just seeing this now. So no choice but to buy in November 2022 😭. But better than nothing!!

@TripOfALifestyle

Жыл бұрын

You could also consider other investment options with the money you have now, and reconsider I Bonds in April if they're attractive. We only buy I Bonds when they are a slam dunk, and we only hold them for short periods of time. Examples of other investments we hold instead: www.tripofalifestyle.com/money/our-investment-portfolio/ And why you should take a peek at I Bonds again in April specifically: kzread.info/dash/bejne/nJ-kts6AnbSfl9I.html This is not professional financial advice, nor is it specific to your situation.

Thanks a ton for the clarity!

Woo Yeah! I’ve been waiting for the I Bonds video! 🎉 🎉 🎉

@TripOfALifestyle

Жыл бұрын

Hope it helps!

Maxed mine out along with my wife and two kids at the end of April of this year when it was 7.12%. Very surprising that not many people know about this.

Great video

@TripOfALifestyle

Жыл бұрын

Glad you enjoyed it! 🙂

Hello! This video was so helpful (just like the rest of your content. Quick question about I Bonds: following your (and others) advice earlier this year, I purchased a chunk at the Oct 2021 rate and then at the April 2022 rate. When it comes to earning interest if I hold these for, say, two years that for the first 6 mo I own the Oct 2021 bonds they grow at 7% percent, then the next 6 they grow at 9.62%, now after Nov 1, they'll grow at 6.5%(estimated) %? Like I'm actually earning interest that is compounding right? The Treasury site makes it hard to tell (or it's user error!)

@TripOfALifestyle

Жыл бұрын

Hey, thanks for the kind words! Yes, I Bonds compound semi-annually (every 6 months). From Treasury Direct: "I savings bonds earn interest monthly. Interest is compounded semiannually, meaning that every 6 months we apply the bond’s interest rate to a new principal value. The new principal is the sum of the prior principal and the interest earned in the previous 6 months. Thus, your bond's value grows both because it earns interest and because the principal value gets bigger." www.treasurydirect.gov/savings-bonds/i-bonds/

Close to getting mine maxed out

@TripOfALifestyle

Жыл бұрын

Nice! All of 2022 has been a great time to buy so far.

Hi, for young retirees like yourself, what withdrawal rate do you follow. You confident the 4% rule will be enough for the next 60-70 years?

@TripOfALifestyle

Жыл бұрын

We planned our retirement loosely based on the 4% rule, but in reality, it doesn't matter as much as people think. When you retire in your 20s or 30s, it's very unlikely that you'll make ZERO earned income for the rest of your life. In reality, we haven't even started withdrawing at all. A couple of small freelance gigs cover our low living expenses and then some. With that said, the 4% rule is looking REALLY strong right now, with long-term, government-guaranteed real returns hovering near 1.5 - 2% via TIPS! More info on the 4% rule: www.tripofalifestyle.com/money/financial-independence-101/ Our entire investment portfolio: www.tripofalifestyle.com/money/our-investment-portfolio/ Why NOT to be scared of early retirement: www.tripofalifestyle.com/money/is-early-retirement-scary/

What if leaving it for 5 years what is the downside?

@TripOfALifestyle

Жыл бұрын

The downside is the opportunity cost. The expected return of riskier investments like stocks is much higher than that of I Bonds over the long run. Check this out: www.tripofalifestyle.com/money/how-to-invest-in-stocks/

What if you purchased now and kept for 18 months. How much would you lose for cashing out early?

@TripOfALifestyle

Жыл бұрын

There's no way to know, because we only know the interest rate 12 months in advance.

great for credit card intro 0% rate arbitrage.. borrow $10k interest free from credit card for daily spending.. put that cash in the i bond. take it out when the intro-rate expires and pay off the credit card. rinse and repeat with new credit card offers!

@TripOfALifestyle

Жыл бұрын

Creative! Using leverage with risk-free investments is rarely possible, but this is certainly one legitimate possibility if you do it right.

The inflation part of the I bond is 6.48% starting in November. The fixed part of the I bond will be announced in November. The fixed part is almost always zero. So expect about a 6.5% rate starting in November. :)

@TripOfALifestyle

Жыл бұрын

If you buy in November, you'll only get that 6.5% for the first 6 months. After that, you'll be forced to hold through an additional 6 months at an unknown rate. Buying in October gives you certainty about the first 12 months, which is explained in greater detail in the video.

@TripOfALifestyle

Жыл бұрын

Also, to be clear, TIPS rates are positive now, so there's definitely a chance that the fixed component of the I Bonds rate is greater than 0% starting in November.

So when is the best day to withdraw after the one year?

@TripOfALifestyle

Жыл бұрын

It depends on whether the next interest rate after that is attractive to you or not. Personally, whenever the I Bonds inflation rate drops below whatever ordinary Treasury Bonds are paying, we'll probably cash out of I Bonds.

How can they drop by 2% when the CPI dropped like .2%?

@TripOfALifestyle

Жыл бұрын

Here's a detailed explanation of exactly how the rates are calculated: kzread.info/dash/bejne/c4JkmqOqk5vOZsY.html

What's the big deal with 10,000 only ?

@TripOfALifestyle

Жыл бұрын

It's just a rule imposed by the Treasury! There are a few loopholes that may allow you to invest a little more, but they're not as simple as the first $10k per year and only add a small amount of benefit.

@wallace_n_gromit3180

Жыл бұрын

Percy, eventually TripOfaLifestyle may begin to cover the TreasuryDirect Gift Box feature of your TD account. Other KZread content creators have. The big deal with that $10,000 purchase limit isn't really there IF YOU ARE WILLING to use the GIFT BOX feature of your TreasuryDirect account; TRUSTS; and Business Accounts. Merely using the GIFT BOX of BOTH my wife's and my TD account we have bought $60,000 in I-bonds in May and June earlier this year. An application of some investment due diligence could yield you better decision-making on this subject.

A comment: If the I-bond interest rate come May of 2023 is low (say 1-3%) and you want to cash out because the interest rate has gone down, why not wait an additional 3 months to cash out after holding the bond for a year. The 3 month early withdrawal penalty will apply to the last 3 months you held the bond at the lower rate. You'd save some $$$$ that way.

@TripOfALifestyle

Жыл бұрын

Yes, you can do that, but it will still cost you 3 months of returns, since you'll be unable to deploy that money somewhere else productive for those 3 months. 😉

@rosenasser5943

Жыл бұрын

@@TripOfALifestyle Hi Trip! That is true, but if you think about it we aren't talking about life changing money. If say you put $10,000 (if you have it) in the i-bond and you wait the extra 3 months to cash it out (if i-bond rates drop let's say to 3% next year), you are talking about losing $80.00 or so). That amount won't even fill up my car anymore and that is sad.

@TripOfALifestyle

Жыл бұрын

@@rosenasser5943 The math doesn't exactly work like that. Remember, there are other investments you can take the money and put it into if you cash out early. Not just I Bonds. With that said, no, it is not life-changing money, and your strategy is probably just fine. 🙂