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Ibonds question: What is the end state? Do you sell after maturity? Maybe an obvious question but I've never dealt with bonds outside an index fund.
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Aug 5, 2022 21:55
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KYOON GRIFFEY JR posted:What inducement is there currently for employer matching that would go away under the theorized plan? To start, who does the employer send the money to, the employee or their IRA? If it’s the employee, then for it to be matching (as opposed to a straight raise, so not deferred) you’d seem to need a way to confirm that an employee IRA contribution actually exists to match. For every contribution, for every employee. It’s pretty easy to see that income tax withholding and filing would almost certainly become more complicated for the employee. I have no idea about how matching affects employer taxes. Stuff like that, on top of the fact that I’d guess most employers would prefer to get rid of 401ks and matching if they could and SamDabbers posted:If retirement savings was decoupled from employers then they'd have to raise salaries to compete instead. I freely admit I haven’t really thought about many details, but the idea is sure looking like a monkey paw to me.
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Aug 5, 2022 22:05
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Selling I Bonds: Thstyre locked up for the first 12 months! Sell after 12 months but before 60 months and receive all but 3 months' worth of interest. Sell after 60 months and you get all the interest. Bond fully matures at 30 years. There is also the matter of whether to pay (federal, not state) tax on the interest each year or defer it until sale. Using I Bonds to pay for education could eliminate all taxes from them.
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Aug 5, 2022 22:08
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Space Fish posted:Selling I Bonds: Good stuff thank you!
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Aug 5, 2022 22:13
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FYI, I still don't know what the ultimate outcome will be but I bought an I-bond that put me over my 10k limit for the year back in April and it still hasn't been cancelled/refunded yet. I checked today and it's even started earning interest. I imagine this is just indicative of how inefficient their administration is and I will eventually get my refund minus the interest. In retrospect I would have put it into my brokerage in SCHD.
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Aug 5, 2022 22:53
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I Bonds endgame seems to just be whenever you can get a HYSA with higher APR than the I Bonds yield. Or maybe a short-ish term CD.
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Aug 5, 2022 23:44
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I put $5k into I Bonds this year. I’ll probably put another $5k into it, and then re evaluate early next year to see if I need to bother with more. Happy to let $10k ride inflation protected though, as an extra emergency fund. That’s kind of where my mentality is with it at the moment.
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Aug 6, 2022 01:23
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This is worth planning ahead of time. Ibonds weren't unattractive even when inflation was low, so I'm not really inclined to get rid of them. I'm thinking I'll go with something like this, but thread input is welcome (HYSA below is a catchall for all cashlike products, including CDs and short term treasuries). If HYSA rates stay below inflation, keep buying the max per year. This can displace bond purchases in my retirement and taxable portfolios. If HYSA rates stay above inflation for an entire calendar year, do not buy Ibonds that year. If HYSA rates exceed inflation for 3 consecutive years, start selling the bonds off, but not more than 10k per year or 20% of holdings, whichever is greater. Maybe 2 years if the difference in rates is compelling enough. The rationale here is that this is a subsidized product, you can't just switch back into it due to the 10k limit, and even prepandemic this was really competitive compared to other risk free products, so I want to avoid wantonly selling them off due to short term fluctuations in rates.
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Aug 6, 2022 02:07
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since this is bond chat, is anyone laddering treasury bills or CDs to park cash instead of a HYSA? I started looking into them after shopping around for higher HYSA rates and saw some discussion about using them as alternatives since their rates are generally higher at the moment for the 1-3 month treasury bills. I don't have a huge emergency fund so it doesn't really seem worth it to try and manage this (although Fidelity has an auto-roll feature that does it for you) just for a slightly higher interest rate and a return that's state tax free. I could see it being useful if you have $20, 30, 40k you want to park and know you won't touch it for a year plus though.
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Aug 6, 2022 09:04
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If I buy i bonds at the current rate, does that rate only apply for this period and adjusts for the next 6 month period, or the whole 30 years for that tranche of i bonds?
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Aug 6, 2022 12:28
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TraderStav posted:If I buy i bonds at the current rate, does that rate only apply for this period and adjusts for the next 6 month period, or the whole 30 years for that tranche of i bonds? It adjusts every 6 months.
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Aug 6, 2022 12:35
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Vice President posted:since this is bond chat, is anyone laddering treasury bills or CDs to park cash instead of a HYSA? I started looking into them after shopping around for higher HYSA rates and saw some discussion about using them as alternatives since their rates are generally higher at the moment for the 1-3 month treasury bills. I don't have a huge emergency fund so it doesn't really seem worth it to try and manage this (although Fidelity has an auto-roll feature that does it for you) just for a slightly higher interest rate and a return that's state tax free. I could see it being useful if you have $20, 30, 40k you want to park and know you won't touch it for a year plus though. I’m considering CDs since it has a guaranteed interest , which is useful for when HYSA rates go down like we saw during the pandemic. But I put some of my emergency savings , as mentioned a few posts back, in I Bonds already. Both CDs and I Bonds really function as an emergency fund, so you don’t need to have THAT much of them unless you’re already maxed out on investment options. more importantly , HYSAs and CDs are def in flux right now, and mostly in a good way of they’re going up, so I would wait to see where they plateau first. Which can be what, 3-6 months? On that note, Ally savings just went up to 1.6%. Woot.
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Aug 6, 2022 13:50
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TraderStav posted:If I buy i bonds at the current rate, does that rate only apply for this period and adjusts for the next 6 month period, or the whole 30 years for that tranche of i bonds?
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Aug 6, 2022 14:30
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fourwood posted:Technically there is an underlying fixed rate that is good for the life of the bond, but it is currently 0%. So the adjustable part is all that matters right now, and yeah, that will change 6 months after you buy it and every 6 months after that. Got it, makes sense. So there's risk that after a few cycles the adjustable drops considerably (theoretically floor is zero) and pays out nothing. But can get out if held for 12 months so not a big deal. Maybe I'll do it after all.
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Aug 6, 2022 14:32
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Risk is it will drop to something like a HYSA basically.
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Aug 6, 2022 14:40
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What you are buying with I Bonds at 0% real is that the $10,000 of today’s dollars will have the same purchase power (assuming CPI calculations match your personal rate of inflation) in 5-30 years with a bit of tax drag. If you put in the $10,000 every year for 20 years, then start withdrawing, you will have bought a further 20 years of raising the floor of your retirement resources. You are also buying flexibility, since you can sell with minimal penalty and then no penalty. It’s a long term savings preservation vehicle, not really an investment vehicle.
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Aug 6, 2022 14:59
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doingitwrong posted:What you are buying with I Bonds at 0% real is that the $10,000 of today’s dollars will have the same purchase power (assuming CPI calculations match your personal rate of inflation) in 5-30 years with a bit of tax drag. If you put in the $10,000 every year for 20 years, then start withdrawing, you will have bought a further 20 years of raising the floor of your retirement resources. You are also buying flexibility, since you can sell with minimal penalty and then no penalty. My guess is that a lot of people buying ibonds are buying them without really internalizing this just because a 10% return is so abnormal, especially as compared to a HYSA.
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Aug 6, 2022 15:28
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Taking 10k out of my emergency fund and throwing it into an ibond for 12 months seems like a real no brainer. In an actual emergency I can get a 0% apr card that can carry that balance interest free for 18-21 months. Am I missing anything obvious here?
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Aug 6, 2022 16:21
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nachos posted:Taking 10k out of my emergency fund and throwing it into an ibond for 12 months seems like a real no brainer. In an actual emergency I can get a 0% apr card that can carry that balance interest free for 18-21 months. Am I missing anything obvious here? I DO think Ibonds can be a great part of an emergency fund to carry you beyond 1-2 months of emergency, but maybe consider staggering your contributions until you get past that one year mark. CopperHound fucked around with this message at 16:31 on Aug 6, 2022 |
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Aug 6, 2022 16:27
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CopperHound posted:
This 100%. As a portion of an e fund, but you don’t want to bet the whole farm.
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Aug 6, 2022 16:44
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doingitwrong posted:What you are buying with I Bonds at 0% real is that the $10,000 of today’s dollars will have the same purchase power (assuming CPI calculations match your personal rate of inflation) in 5-30 years with a bit of tax drag. If you put in the $10,000 every year for 20 years, then start withdrawing, you will have bought a further 20 years of raising the floor of your retirement resources. You are also buying flexibility, since you can sell with minimal penalty and then no penalty. Lol someone else made this exact same Stupidly smug post a few months ago. (USER WAS PUT ON PROBATION FOR THIS POST)
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Aug 6, 2022 17:04
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CopperHound posted:If you're talking about actual emergency fund instead of just medium term savings there is a chance that credit will not be so easy to come by and not being able to withdraw it for a year might be a problem. I don't think lenders like issuing tens of thousands in unsecured credit to people without reliable income. Also the treasury direct website sucks balls and you might click the wrong button and get locked out of your account until you call them to clear it up. I bet they make you fax some bullshit because they are stuck in the '80s.
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Aug 6, 2022 17:20
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I got locked out a month ago when I tried to link another bank account. I haven't contributed yet this year because  I swear, security questions are some of the most asinine poo poo.
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Aug 6, 2022 18:42
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Your stripper name is the street you grew up on, your mother's maiden name, and the last four of your social, everyone post your stripper name.
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Aug 6, 2022 20:08
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Riley Reid 6969
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Aug 7, 2022 02:59
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Hugh Jass 8008
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Aug 7, 2022 11:07
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Backdoor Roth IRA question It looks like my MAGI for this year will likely be above the Roth IRA contribution limits. I wasn’t expecting this and was contributing regularly to my Roth IRA and my wife’s Spousal Roth IRA without doing the backdoor. I suppose I should start back-dooring the rest of our contributions, but what about the ones I already deposited this year?
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Aug 8, 2022 01:40
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Animal posted:Backdoor Roth IRA question Not a lawyer or accountant but apparently during the year, people are allowed to recharacterize Roth IRA contributions & earnings into traditional IRA contributions and act as if that's what was done initially. Then convert those traditional IRA dollars back into the Roth. It might get complicated when deciding how much to recharacterize since the investments and earnings are probably comingled with the other Roth investments. And there's also the additional tax impact on converting the earnings into Roth.
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Aug 8, 2022 02:26
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Animal posted:Backdoor Roth IRA question weird stripper name, but ok
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Aug 8, 2022 16:26
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Super Dan posted:weird stripper name, but ok Moon Moon was already taken.
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Aug 9, 2022 12:53
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Animal posted:Backdoor Roth IRA question Any chance you can increase traditional 401k / HSA? Depending on how close you are to the cap, this could put you under.
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Aug 9, 2022 13:24
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DNK posted:Any chance you can increase traditional 401k / HSA? Depending on how close you are to the cap, this could put you under. Those are all maxed out. I guess it’s one of those “good problems to have”
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Aug 9, 2022 13:31
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Duckman2008 posted:I’m considering CDs since it has a guaranteed interest , which is useful for when HYSA rates go down like we saw during the pandemic. I really like Fidelity's CD ladder tool, just enter an amount you want to invest and pick 1,2,3 years and it auto finds the bonds to divide your initial investment into CDs that cash out each quarterly or auto-reinvest into a new one. Playing around with it today a minimum $4000 1-year CD ladder would average 2.75% ladder. It looks nifty (although I could do the exact same thing at Vanguard or anywhere with just some extra clicks) but I still can't get over my hesitation to lock up my emergency fund just to chase 1 to 1.5% more interest.
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Aug 10, 2022 01:29
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HYSA are at 1.5% or so right now so doesn't seem worth the trouble, YMMV.
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Aug 10, 2022 02:16
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Vice President posted:but I still can't get over my hesitation to lock up my emergency fund just to chase 1 to 1.5% more interest. You shouldn't. They're better used for cash that you need to spend in the next 1-3 years (down payment, etc.).
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Aug 10, 2022 03:25
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Smashing Link posted:HYSA are at 1.5% or so right now so doesn't seem worth the trouble, YMMV. This is correct. I get tempted too, for the record, but it’s always a good reminder that an emergency fund means liquidity is the absolute number one condition, even if it was a 0% interest rate. Getting a better interest rate is always optimal, but you gotta always adhere to liquidity.
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Aug 10, 2022 06:29
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neato, all the money i lost in the stock market downturn has returned to me, by the magical power of doing nothing
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Aug 12, 2022 22:47
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DELETE CASCADE posted:neato, all the money i lost in the stock market downturn has returned to me, by the magical power of doing nothing Wrong , you missed out on the value of NFTs and Bitcoin.
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Aug 12, 2022 22:53
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It would have been nice to have bought like $100 of bitcoin as a joke 10 years ago. But I'm convinced being a bitcoin millionaire would have made me a severe drug addict and r uined my life.
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Aug 12, 2022 22:54
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Mu Zeta posted:It would have been nice to have bought like $100 of bitcoin as a joke 10 years ago. But I'm convinced being a bitcoin millionaire would have made me a severe drug addict and r uined my life. Plus you would've just lost it to Mt Gox in 2014, since that was where basically everybody held their "bought a little as a joke" bitcoins Buying crypto in 2012 was a VERY different experience to how streamlined and user-friendly it is now
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Aug 12, 2022 23:02
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