I Bond, iBonds, i-Bonds or Series I bonds.
- Thruhiker
- Thruhiker
- ycartth
- pzoo
- pzoo
- allancoleman
- Katrina75
- pzoo
- KLR
- ycartth
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» Thruhiker - Re: Re: I Bonds
In response to message posted by Kirk:Can't lose money in I-bonds. As I understand it, if the CPI ever had a negative adjsutment that exceeded the fixed rate, the bonds would simply hold their value until the formula produced a positive return.
Also, quick and dirty way to calculate the annual I-bond return over the next 6 months is to add the fixed rate plus the inflation rate plus the inflation rate again.
-- posted by Thruhiker
» Thruhiker - Re: Re: Re: I Bonds
In response to message posted by Thruhiker:This is a theoretical discussion anyway; the odds of deflation actually happening are less than the odds of Will L becoming Brinkers new co-host or Hugs writing a post on the future of BOWG that actually makes sense.
-- posted by Thruhiker
» pzoo - Re: Re: Question
Thanks for your response. That's the usual reaction I get: Why do it?Virtually all our assets (other than our house) are in deferred accounts and I expect to reach critical mass within 7-10 years. I recently switched careers (got tired of previous career) and we basically work enough to live, but not save much. We really shouldn't need to save much more with what we have in the deferred accounts.
So, bottom line, if I had the non-deferred money to buy I-bonds I would. When I hear people say how great I-bonds are, they usually don't mention the tax deferral benefits. They focus on 4.66% and adjusted every 6 months for inflation.
Aren't they a good investment for the bond portion of a portfolio without the tax benefits?
Again, can I hold I-bonds in my IRA?
-- posted by pzoo
» allancoleman - Re: Re: "Can I have I-bonds in my IRA? "
In response to message posted by Kirk:hi kirk . good advice .
-- posted by allancoleman
» KLR - Re: Re: Re: Re: "Can I have I-bonds in my IRA? "
In response to message posted by Kirk:.
You pay taxes on TIPs all the way along and you even pay taxes on money you won't get until maturity.
Although exempt from local and state taxation, interest paid during the year on TIPS held outside of tax-deferred accounts is considered ordinary income for federal income tax purposes.
Additionally, although increases to the inflation-adjusted principal will not be paid until the security matures, any increase must also be declared as ordinary income subject to taxation in the year the increase occurs.
At maturity, the security is redeemed at the greater of the inflation-adjusted principal or the principal paid at original issue.
So if you are going to buy TIPs, use a tax-deferred account if possible.
-- posted by KLR
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