Personal Finance and Investing

Last edited Mon Oct 17, 2022, 09:55 AM - Edit history (1)

One HAS TO set up a TreasuryDirect account for this. You can't get them at Vanguard, Fidelity, etc., or from your brokerage.

You can't touch them for a year. No matter how drastic your need, no matter how unusual your circumstances.

Between one and five years, if you withdraw, you lose 3 months of interest, which is not a Titanic-sized disaster, you still get 9/12 (3/4) of the interest that you expected for that year, which is still mighty high: 3/4 * 9.62% = 7.21%. 3/4 * 6.5% = 4.9%. (Some people go apeshit when you mention penalty, OMG, the NAKBA, the NAKBA!)

Edit: 6.5% is about what they are expecting the rate to be if you purchase after October 31. The 6.5% rate, if that is what it is, will be good for an I-bond purchased between Nov 1 and May 1, and you'll get that rate for a full 6 months no matter when during that period you buy it. Then the interest rate will reset again. It resets May 1 and November 1 every year.

(see Mahatmakanejeeves above where, to get the current 9.62% rate, "Complete the purchase of this bond in TreasuryDirect by October 28, 2022 to ensure issuance by October 31, 2022.").

After five years you can withdraw without penalty.

Its free of state and local taxes.

There's also a provision that allows you to buy an extra up to $5,000 in paper bonds with your tax refund, if you have one coming (or can make one come by making a big estimated tax payment before the end of the year).