Although the current 2.2 percent interest rate on Series I savings bonds is appealing, purchasing the bonds has grown more difficult. Paper Series I and EE savings bondsthose handy envelope stuffer giftscan no longer be purchased in banks or credit unions; instead, you must purchase electronic bonds through TreasuryDirect, the Treasury Department’s Web-based system. Our correspondent discovered the procedure of purchasing a savings bond for her little nephew to be cumbersome. Here’s some assistance:
What is the procedure for purchasing an I bond?
When it comes to tax considerations, I bonds have the upper hand over CDs. State and local income taxes do not apply to I bond interest, and you can elect to postpone federal income taxes on your earnings until you cash the bonds in. (On the other hand, CD bank interest is taxed annually as it accrues, even if you reinvest it all.) Another tax benefit that parents and grandparents may be interested in is that if you cash in an I bond to pay for higher education, the interest may not be federally taxable at all. However, to qualify for this income exclusion, your modified adjusted gross income must be below a particular thresholdin 2021, the threshold will be $83,200 for singles and $124,800 for couples. This figure is updated for inflation every year.
Set up an account with TreasuryDirect and link it to your bank or money market account to purchase I bonds. You can also purchase I bonds by enrolling in the Treasury’s payroll savings program, which allows you to set up recurring purchases of electronic savings bonds with funds deducted directly from your salary.
Is buying paper I bonds the only option these days? Request that your tax refund be utilized to buy them. If you file your 2021 tax return by early April and are due a refund, consider investing it in I bonds to lock in that 7.12 percent interest rate for six months. (In addition to the $10,000 you can buy online through TreasuryDirect, you can buy up to $5,000 in I bonds with your refund.)
What is the value of a $50 savings bond?
A $50 EE bond, for example, costs $50. EE bonds are available in any denomination up to the penny for $25 or more. A $50.23 bond, for example, could be purchased.
What is the price of a Series I bond?
Series I bonds are issued and sold at face value, which means you pay the full face value of the bond. A $100 I bond, for example, costs $100. Between $25 and $10,000, you can buy Series I electronic bonds in any amount (to the cent).
Is it wise to invest in I bonds in 2021?
- I bonds are a smart cash investment since they are guaranteed and provide inflation-adjusted interest that is tax-deferred. After a year, they are also liquid.
- You can purchase up to $15,000 in I bonds per calendar year, in both electronic and paper form.
- I bonds earn interest and can be cashed in during retirement to ensure that you have secure, guaranteed investments.
- The term “interest” refers to a mix of a fixed rate and the rate of inflation. The interest rate for I bonds purchased between November 2021 and April 2022 was 7.12 percent.
Should I invest in 2022 bonds?
The TreasuryDirect website is a good place to start if you’re interested in I bonds. This article explains how to acquire I bonds, including the $10,000 yearly limit per person, how rates are computed, and how to get started by creating an online account with the US Treasury.
I bonds aren’t a good substitute for stocks. I bonds, on the other hand, are an excellent place to start in 2022 for most investors who require an income investment to balance their stock market risk. Consider I bonds as a go-to investment for the new year, whether you have $25, $10,000, or something in between. But don’t wait too long, because after April, the 7.12 percent rate will be gone.
Is it possible to purchase bonds from Fidelity?
Although I-bonds cannot be purchased through a brokerage account, Fidelity offers TIPS at auctions and in secondary markets. The distinctions between I-bonds and TIPS should be understood by potential investors. I-bonds, for example, may come with a 3-month interest penalty, depending on how long you’ve had the bond.
Can a husband and wife purchase I bonds together?
I Bonds are a good alternative for those who want to put money in a low-risk investment for a year or more. If inflation rises in the next months, the rate may adapt and move higher for a period of time.
The trick here is to set a limit on how much money you can put into I Bonds in a calendar year.
You can only buy $10,000 in electronic I Bonds every year, or $20,000 for a married couple. Savings bonds can be purchased and held in an online account at www.TreasuryDirect.gov.
Individuals can purchase another batch of I Bonds in 2022 for up to $10,000 individually or $20,000 for a couple.
According to Dan Pederson, a certified financial adviser and president of The Savings Bond Informer, a married couple may buy up to $40,000 in I Bonds over the course of a month.
If you haven’t purchased any I Bonds by the end of 2021, you can essentially increase your annual purchase limit in a short period of time by purchasing bonds before the end of 2021 and again early in 2022.
What is the value of a $100 savings bond dated 1999?
A $100 series I bond issued in July 1999, for example, was worth $201.52 at the time of publishing, 12 years later.