Investing - I Bonds

Just wondering if any of you have explored I-Bonds? I currently have some cash sitting in a Savings account earning 0.10% interest and of course inflation will kill that very quickly. Over the last few weeks I have been reading about I-Bonds being a safe government backed investment that is currently paying 9.62% (it adjusts with inflation). From what I have read the downsides are that you must invest for a minimum of one year and if you cash them in before fives years you sacrifice 3 months of interest. The APR adjusts every six months and you are limited to $15k per year per person.

I really don't see many risks and looks a lot safer than the stock market right now. I know I don't want to leave cash in my savings account and it is money that I don't expect to need for many years.

Any thoughts?

I bought $10K inside one of my entities after the May Interest rate was announced.
The cash was just sitting in a corporate savings account.
Now it is sitting inside a corporate owned US Treasury Online Account invested in iBonds.
You have all the negatives properly assessed which mainly are holding period related.
Interest rate adjusts every 6 months and is based on a 0% rate + Inflation Rate Factor.
Doesn't look like "Biden-flation" is going away anytime soon, so hopefully the November re-set will be high as well.
You can do $10K for every tax ID number you control (e.g. entities work as well as SSN's and Spouse's SSN).
So I think a married couple can do $20K combined.
To do the $15K, I believe $5K must come in the form of a Federal Tax Refund that you direct to invest in iBonds.
I could be mistaken, do you own due diligence.

Can you buy them within an IRA?

Does the interest automatically invest into more Bonds until you cash in or do you get a check twice per year?

Quote: Gandler

Can you buy them within an IRA?

Does the interest automatically invest into more Bonds until you cash in or do you get a check twice per year?

Good question. I just assumed it rolled into the bond account but I have no idea.

This is like a Savings Bond in that when you go to redeem it, you will get principle + interest.
I believe this means interest accrued is re-invested for the next fixed rate six month period.
$10,000 @ 9.62% (annual rate for 6 months) = $481.
I believe you will have $10,481 earning interest for the next six months at the next fixed rate amount.
If you buy part way through the 6 month term, obviously your interest accrual is pro-rated.

Based upon what I have read and JCW09's comments I went ahead and bought two of them (one for me and one for the wife). I will probably buy two more next year. 9.62% interest is just too good to pass up in this market.

We did that as well. Thanks for sharing that 'I Savings Bond' information.

I was listening to Dave Ramsey the other day, and he was doing one of his rants, and casually compared I-bonds to Crypto and how people who are rushing to buy both right now are being foolish. Its no secret that he hates crypto, but I was caught off guard when he threw I-bonds in there (not long after I first heard of them here). I can't find a clip of it on Youtube, but that is essentially what he said.

On his website it mentions them in the gov bonds section, and it mentions the downside being that the returns are not guaranteed and some years they can just sit there:
https://www.ramseysolutions.com/retirement/savings-bonds#:~:text=The%20paper%20bonds%20start%20at,you%20decide%20to%20cash%20in.

Its no secret that he thinks that you should not invest in anything other than mutual funds and index funds. But, the interesting thing is he says of the bonds available EE is better than I (because your money is guaranteed to double every 20 years) if you are set on buying bonds.

Ramsey is good on a lot of things, but I think he is off on some topics and this is one of them in today's inflationary environment.
He would also advise you to pay off your mortgage regardless of interest rate.
Do you really think it is smart to pay off a mortgage with a 3% interest rate fixed for the next 28 years?
Dave would say yes, get yourself debt free!
Budgeting, paying off high interest rate debt, getting a side hustle to accomplish that goal, etc. All good stuff.

I-Bonds pay 0%+Inflation at a rate determined every 6 months and fixed for the next 6 months.
It isn't like you aren't going to know if the interest rate under the formula is zero if it is calculated to be that at some point in the future.
Hello, pay the F attention to your investments and go in and see what the new rate is every 6 months.
If you don't like the next interest rate determination, redeem the bond three months into that crappy rate period, and invest elsewhere.
Your penalty is the last three months of crappy interest and you are out. I'll take that risk to gain the next 6 months of 9.62%!

Quote: JCW09

Ramsey is good on a lot of things, but I think he is off on some topics and this is one of them in today's inflationary environment.
He would also advise you to pay off your mortgage regardless of interest rate.
Do you really think it is smart to pay off a mortgage with a 3% interest rate fixed for the next 28 years?
Dave would say yes, get yourself debt free!
Budgeting, paying off high interest rate debt, getting a side hustle to accomplish that goal, etc. All good stuff.

I-Bonds pay 0%+Inflation at a rate determined every 6 months and fixed for the next 6 months.
It isn't like you aren't going to know if the interest rate under the formula is zero if it is calculated to be that at some point in the future.
Hello, pay the F attention to your investments and go in and see what the new rate is every 6 months.
If you don't like the next interest rate determination, redeem the bond three months into that crappy rate period, and invest elsewhere.
Your penalty is the last three months of crappy interest and you are out. I'll take that risk to gain the next 6 months of 9.62%!

I am not a religious Dave Ramsey follower (I mostly like to get a variety of perspectives), but from what I understand of his mindset, is that you should not be moving investments around, throw the money in a fund (always a fund never an individual stock or investment -with the exception of real estate investing which requires active management, but let's put that all aside-) and forget it until you near retirement or until you need use of it (for non retirement funds), it seems he is very against the mindset of people who try to move money between investments to beat the market. So I am sure his view is based on buying the bonds and having them sit there for the full 30 years (I believe that is the designed term, if not whatever that bond is), not re-arranging every few months.

In fact I would go so far as to even say that he does not want you to watch the market or monitor status (because it often causes unnecessary panic or misplaced confidence, and in either case leads to bad decisions). Just choose a set of funds, choose how much you want to contribute per year or month and forget it until it is time for withdrawals.... So the idea of looking every three-six months would be totally alien and absurd to him.

Though as for debt, his main priority (which seems to be based on a combination of personal experience and religious belief) is to eliminate all debt as quickly as possible, and this should be the top goal until accomplished (though you can contribute to an employer-matching retirement fund if you still have a mortgage).

I am not saying that I agree with all of that, but that is my interpretation (in a very basic summary) of his views from what I have listened of him (which is limited, and I have not read his books). Though I can also see how for many people that can be good advice (since many people have the mindset of taking debt, and trying every little scheme to beat the market).

But, I think his view of the I-Bonds must be based on looking at it for a full term (30 years or whatever) based on the above.