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The cap of $10,000 makes it not very interesting from an investment standpoint. And while the yield is great on paper, it merely lets you keep up with inflation

The cap of $10,000 makes it not very interesting from an investment standpoint. And while the yield is great on paper, it merely lets you keep up with inflation in practice. There are probably better ways to use $10,000 if that is all you have and you are interested in growing money - online courses come to mind.

bombcar 4y ago
You can double that and more if you're married, and use the tax refund trick. But the reality is that 10% on 10k isn't a terribly large amount of money at the end of the day.
- toomuchtodo 4y ago
  This. Depending on your portfolio, time value, and investment objectives, there isn’t any point in jumping through hoops for a few hundred bucks and having the funds illiquid versus something you can liquidate in a few clicks (or margin for immediate access for another opportunity).
  - giantg2 4y ago
    Please, show me where I can make a few hundred dollar with less time investment on my part. I bet it goes negative.
- benmanns 4y ago
  Additionally, the 10% will probably only last for a year or two, at which point it'll be earning 1-3% and we'll have all jumped through these hoops for $100-300/year.
  - adabyron 4y ago
    At this point you're pretty much guaranteed a risk free 8% for 12 months. That's roughly what Buffet would say you should average in the stock market. It's a great place to park cash right now. Maybe the stock market makes a huge come back but a lot of things are pointing against that happening in the next year. The Fed & inflation, baby boomer retirements causing stocks to get sold & less risk assets bought, that whole Europe thing going on.
- BbzzbB 4y ago
  You're gonna invest that 10k somewhere in all likelihood, a risk free 10% is pretty much unbeatable, it's higher than most high-yielding (and vice) stocks, but without bearing the risk of capital loss. Seems silly to me not to use I-bonds even if the cap is relatively low, sure wish I could (not American).
  - ghaff 4y ago
    I don't love opening a new account to get some incremental returns on a relatively modest allowed investment. But, while I don't go to a lot of trouble to optimize everything, for me this crfossed the line into "why not" (but then, I didn't have to jump through any hoops.)
  - lotsofpulp 4y ago
    As other comments have indicated, the time and effort to actually invest the $10k in ibonds is considerable given the difficulty of using the website. I also want my cash to be accessible within a few days, so I prefer FDIC insured savings accounts. For locking up money for months or a year in an ibond, the annual gain compared to a savings accounts is only a maximum of $700 or so. The rest I invest in equities, which assuming the US has a functioning society in 5, 10, or 20+ years, will be worth far more.
    - bombcar 4y ago
      It's entirely possible that for a bit more hoop-jumping you could beat the 10% by continually churning where your money is for the signup bonuses; again, not likely actually worth it considering the time.
      - giantg2 4y ago
        What sign-up bonuses?
        bombcar 4y ago
        Things like https://account.chase.com/consumer/banking/seo https://account.chase.com/consumer/banking/seo or https://www.bankrate.com/investing/best-brokerage-account-bonuses/ https://www.bankrate.com/investing/best-brokerage-account-bo... or similar. They're not quite as good as they used to be, but if you had $10k in cash you could cycle through some and collect a few $hundreds.
- qqqwerty 4y ago
  Well, if you and your spouse had put in 10k at the end of 2021, and again in 2022, and then put another 10k at the start of 2023 you will have built up your I-Bond allocation to $60k in about a 13-14 month timeframe. What is nice about a position of that size is that that amount is in the ballpark of a typical families expenditures in a year (ignoring the occasional big ticket items like a car), which means you have essentially hedged away your exposure to inflation. So yeah, $10k is not a lot, but that is an annual limit, not a lifetime limit. And a good way to hedge inflation is to build an I-Bond allocation that is equivalent to your annual expenses which for most households should only take a few years to get to. And an added bonus is that selling your I-Bonds early has fairly minimal penalties and can be sold at face value (i.e. not subject to market swings) so your I-Bond allocation can double as an emergency fund.
  - bombcar 4y ago
    Yeah, they can be wonderful; but not everyone will want to bother with them (I find one of the easiest is to just get your tax return in physical bonds if you want to dabble).
    - giantg2 4y ago
      How do you get a physical bond? I thought they went all virtual these days.
      - bombcar 4y ago
        https://www.irs.gov/refunds/using-your-income-tax-refund-to-save-by-buying-us-savings-bonds https://www.irs.gov/refunds/using-your-income-tax-refund-to-... You can still get them if you get them as part of your tax return. Overpay estimated tax or increase your withholding. 10. Will I get actual paper bond certificates? Yes. Savings bonds purchased with a tax refund will be issued as paper bond certificates in your name. If you are married and filed a joint return, the savings bonds will be issued in your name and your spouse's name. If you purchase savings bonds for someone else, the bonds will be issued in the name(s) that you listed on Form 8888.
amilios 4y ago
Online courses? Do you mean "investing in yourself" per se? Any ideas for growing the money that involve actual investment instruments, if I hypothetically have $10k lying around?
- freediver 4y ago
  Yes investing in yourself. I said online courses but it can be anything that will make you better equipped for earning much more than $10k.
ceejayoz 4y ago
Its pretty great from an emergency fund standpoint, though. $30k/couple/year if you buy the extra $5k/person with tax return. After a few years you've got a nice inflation-protected emergency fund you can draw on reasonably quickly in the case of something like a job loss.
- deleted 4y ago
  [deleted]
- lotsofpulp 4y ago
  If you are married filing joint, it is only $5k per couple. https://thefinancebuff.com/overpay-taxes-buy-i-bonds-better-than-tips.html https://thefinancebuff.com/overpay-taxes-buy-i-bonds-better-... >The $5,000 maximum is per tax return, not per person. If you’re married filing jointly, you still can buy only a maximum of $5,000 for both of you combined, not $5,000 for each of you.
rufus_foreman 4y ago
>> it merely lets you keep up with inflation in practice Merely? What are some other ways to keep up with inflation with near zero risk?
gilch 4y ago
> And while the yield is great on paper, it merely lets you keep up with inflation in practice. True in the normal case, when inflation changes slowly, but because the I-Bond rate is computed retroactively, it's a better deal than normal when inflation suddenly increases.
HWR_14 4y ago
It's kinda of like Social Security. It's supposed to allow an individual to have a limited nest egg subsidized by the government. It's not supposed to be a primary investment for wealthy people.

bombcar 4y ago

You can double that and more if you're married, and use the tax refund trick. But the reality is that 10% on 10k isn't a terribly large amount of money at the end of the day.

toomuchtodo 4y ago
This. Depending on your portfolio, time value, and investment objectives, there isn’t any point in jumping through hoops for a few hundred bucks and having the funds illiquid versus something you can liquidate in a few clicks (or margin for immediate access for another opportunity).
- giantg2 4y ago
  Please, show me where I can make a few hundred dollar with less time investment on my part. I bet it goes negative.
benmanns 4y ago
Additionally, the 10% will probably only last for a year or two, at which point it'll be earning 1-3% and we'll have all jumped through these hoops for $100-300/year.
- adabyron 4y ago
  At this point you're pretty much guaranteed a risk free 8% for 12 months. That's roughly what Buffet would say you should average in the stock market. It's a great place to park cash right now. Maybe the stock market makes a huge come back but a lot of things are pointing against that happening in the next year. The Fed & inflation, baby boomer retirements causing stocks to get sold & less risk assets bought, that whole Europe thing going on.
BbzzbB 4y ago
You're gonna invest that 10k somewhere in all likelihood, a risk free 10% is pretty much unbeatable, it's higher than most high-yielding (and vice) stocks, but without bearing the risk of capital loss. Seems silly to me not to use I-bonds even if the cap is relatively low, sure wish I could (not American).
- ghaff 4y ago
  I don't love opening a new account to get some incremental returns on a relatively modest allowed investment. But, while I don't go to a lot of trouble to optimize everything, for me this crfossed the line into "why not" (but then, I didn't have to jump through any hoops.)
- lotsofpulp 4y ago
  As other comments have indicated, the time and effort to actually invest the $10k in ibonds is considerable given the difficulty of using the website. I also want my cash to be accessible within a few days, so I prefer FDIC insured savings accounts. For locking up money for months or a year in an ibond, the annual gain compared to a savings accounts is only a maximum of $700 or so. The rest I invest in equities, which assuming the US has a functioning society in 5, 10, or 20+ years, will be worth far more.
  - bombcar 4y ago
    It's entirely possible that for a bit more hoop-jumping you could beat the 10% by continually churning where your money is for the signup bonuses; again, not likely actually worth it considering the time.
    - giantg2 4y ago
      What sign-up bonuses?
      - bombcar 4y ago
        Things like https://account.chase.com/consumer/banking/seo https://account.chase.com/consumer/banking/seo or https://www.bankrate.com/investing/best-brokerage-account-bonuses/ https://www.bankrate.com/investing/best-brokerage-account-bo... or similar. They're not quite as good as they used to be, but if you had $10k in cash you could cycle through some and collect a few $hundreds.
qqqwerty 4y ago
Well, if you and your spouse had put in 10k at the end of 2021, and again in 2022, and then put another 10k at the start of 2023 you will have built up your I-Bond allocation to $60k in about a 13-14 month timeframe. What is nice about a position of that size is that that amount is in the ballpark of a typical families expenditures in a year (ignoring the occasional big ticket items like a car), which means you have essentially hedged away your exposure to inflation. So yeah, $10k is not a lot, but that is an annual limit, not a lifetime limit. And a good way to hedge inflation is to build an I-Bond allocation that is equivalent to your annual expenses which for most households should only take a few years to get to. And an added bonus is that selling your I-Bonds early has fairly minimal penalties and can be sold at face value (i.e. not subject to market swings) so your I-Bond allocation can double as an emergency fund.
- bombcar 4y ago
  Yeah, they can be wonderful; but not everyone will want to bother with them (I find one of the easiest is to just get your tax return in physical bonds if you want to dabble).
  - giantg2 4y ago
    How do you get a physical bond? I thought they went all virtual these days.
    - bombcar 4y ago
      https://www.irs.gov/refunds/using-your-income-tax-refund-to-save-by-buying-us-savings-bonds https://www.irs.gov/refunds/using-your-income-tax-refund-to-... You can still get them if you get them as part of your tax return. Overpay estimated tax or increase your withholding. 10. Will I get actual paper bond certificates? Yes. Savings bonds purchased with a tax refund will be issued as paper bond certificates in your name. If you are married and filed a joint return, the savings bonds will be issued in your name and your spouse's name. If you purchase savings bonds for someone else, the bonds will be issued in the name(s) that you listed on Form 8888.

amilios 4y ago

Online courses? Do you mean "investing in yourself" per se? Any ideas for growing the money that involve actual investment instruments, if I hypothetically have $10k lying around?

freediver 4y ago
Yes investing in yourself. I said online courses but it can be anything that will make you better equipped for earning much more than $10k.

ceejayoz 4y ago

Its pretty great from an emergency fund standpoint, though. $30k/couple/year if you buy the extra $5k/person with tax return. After a few years you've got a nice inflation-protected emergency fund you can draw on reasonably quickly in the case of something like a job loss.

deleted 4y ago
[deleted]
lotsofpulp 4y ago
If you are married filing joint, it is only $5k per couple. https://thefinancebuff.com/overpay-taxes-buy-i-bonds-better-than-tips.html https://thefinancebuff.com/overpay-taxes-buy-i-bonds-better-... >The $5,000 maximum is per tax return, not per person. If you’re married filing jointly, you still can buy only a maximum of $5,000 for both of you combined, not $5,000 for each of you.

rufus_foreman 4y ago

>> it merely lets you keep up with inflation in practice Merely? What are some other ways to keep up with inflation with near zero risk?

gilch 4y ago

> And while the yield is great on paper, it merely lets you keep up with inflation in practice. True in the normal case, when inflation changes slowly, but because the I-Bond rate is computed retroactively, it's a better deal than normal when inflation suddenly increases.

HWR_14 4y ago

It's kinda of like Social Security. It's supposed to allow an individual to have a limited nest egg subsidized by the government. It's not supposed to be a primary investment for wealthy people.