I-Bonds Discussion Thread (continuation of the FW thread)

I bow to your wisdom / vision, even though you didn’t exactly explain why you expected it to be non-zero. It makes little sense considering the demand (even if it was for the previous period) and the fact that there’s nothing better.

Manufactured Revocable Trusts!?

hard enough for me to handle my familys 4 SSNs.+ don’t want to deal with issues w/ Treasury. Don’t mind churning with private banks but not US Govt.

It’s neither illegal nor immoral IMO. At the very least you can have 2 individual and one joint trust without churning.


I agree with the article

I like both investments, and I will continue to buy both.

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Hoping to gain some insight… Giving today’s interest rates, is an I-bond still a better alternative than, say, a 26- or 52-week T-bill?

Two different animals. Depends on your goals.

How much do you want to invest? The Ibond is limited to $10 K per individual per calendar year while Tbills are unlimited

When do you need the money? You cannot cash an I bond in the first year after you buy it. You pay an interest penalty if you cash it before five years. You can sell Tbills on the secondary market anytime.

The tbill is not inflation-adjusted and the interest rate is substantially lower than inflation depending on the period when you measure the inflation.

The closest treasury security to an ibond is actually a five year tips. See the discussion by tipswatch linked by @xerty


Thanks for the info.

Thanks for the reply. I should have given more context to my situation. I have a chunk of cash in brokerage accounts that I’ve been using to buy/reinvest short-term T-bills (mostly 4-, 8-, and 13-weeks). I don’t anticipate taking any new stock long positions in the next 6-12 months, and won’t need the cash either.

Now that the calendar year starts, I can buy another $10K in I-bonds. Question is… would $10K in an I-bond be potentially more profitable than $10K in T-bills? The uncertainty with the I-bond is the variable rate, which is why I hesitate.

If you had $10K that won’t be needed anytime soon, would you invest it in T-bills or in I-bond or something else?

My guess would be IBonds will the better return. But it’s purely a guess. You know you’ll be getting 3.45% for the year just from the first 6 months’ interest, which doesnt require much from the yet-to-be-determined second 6-month period to clear 5% for the year, and I doubt short term TBill rate will get to that level.

But when only holding for 1 year, it gets a lot trickier due to the 3-month early redemption penalty. I suspect (and it’s purely a blind guess) that when including that penalty, the net returns will basically be a wash and it really wont have mattered which you invested in.


More discussion of I bonds and TIPS.



Are I Bonds still attractive?

I Bonds purchased from January to April 2023 will pay an annualized composite rate of 6.89% for six months, which includes the fixed rate of 0.4%. Is 6.89% attractive? Definitely. But let’s look at the alternatives:

  • A six-month Treasury bill has a nominal yield of about 4.76%.
  • Best-in-nation 6-month bank CDs are yielding about 4.4%.
  • A 1-year Treasury bill has a nominal yield of about 4.73%.
  • Best-in-nation 1-year bank CDs are yielding about 4.75%.
  • A 5-year Treasury note now yields about 4%.
  • A 5-year TIPS has a real yield of about 1.58%.

As a six-month investment, an I Bond definitely looks attractive. But keep in mind that an I Bond has to be held for at least 12 months, and redeeming before 5 years forfeits your last three months of interest. That brings uncertainty into the equation.


Thanks, Xerty.

Funny that safe I Bonds did better than the most risky Crypto last year

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…until you consider that the year(s) before, that Crypto often gained more in one day than I-Bonds earned for the entire year.

fair enough. Willing to stomach volatility in stock indices b/c long term trends are up/recovers . Crypto could go to 0.

Back to topic I Bonds my only concern is 0 years (I’ve had a few since I have “set it and forget it” since buying with a CC FWF days. I will be more mindful if /when inflation goes down. Thankfully it is headline news these days.


The Feds fudging the inflation numbers doesn’t impact I bonds since they don’t use the “seasonally adjusted” CPI numbers in the headlines.

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Good article about how to compute the current value of I-bonds.

The article links to this page that has a calculator for the current value


Guessing rates for the next reset in May

if my estimates are close we should expect the May I-bond to offer 0.7-0.9% fixed rates with 2-2.4% variable rates for a composite rate of 2.7-3.3%. This is far below the current 6.89%.

Although investors may be attracted to the 6.89% annualized yield, as compared to other fixed income assets, this yield is only offered for 6 months. If CPI ends up being 1% by May, resulting in the next variable rate of 2% annualized, I-bonds bought today will only offer 4.05% over the next 12 months when the early redemption penalty is assessed. Investors can earn 5%+ from the 1-year Treasury now.