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December CPI-U is posted = 236.525
Base line for next change (September) = 237.945
Total inflation for Oct+Nov+Dec = -0.6%    (It was -0.26% last month)

We have THREE more months to go before new I-bonds inflation component rate will be set

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wow hopefully not another 0%

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CPI-U (64.48kB)
Disclaimer
RagingBull said:   wow hopefully not another 0%
We are in much better shape at -0.6% this this time than have been in 2014 at -1.35% for last 3 month of the year, and Q4 historically has negative numbers. 
Also note that January 2015 posted big negative which was very unusual event and contributed heavily to the total negative inflation for that 6-month period. 
Waiting to see what this January will be like 
 

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January CPI-U is posted = 236.916
Base line for next change (September) = 237.945
Total inflation for Oct+Nov+Dec+Jan = -0.43% (It was -0.6% last month)

We have TWO more months to go before new I-bonds inflation component rate will be set

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MoneyOCD said:   January CPI-U is posted = 236.916
Base line for next change (September) = 237.945
Total inflation for Oct+Nov+Dec+Jan = -0.43% (It was -0.6% last month)

We have TWO more months to go before new I-bonds inflation component rate will be set

  Great - we're looking at possibly another 6 months of  0 rate.

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February CPI-U is posted = 237.111
Base line for next change (September) = 237.945
Total inflation for Oct+Nov+Dec+Jan+Feb = -0.35% (It was -0.43% last month)

We have ONE more month to go before new I-bonds inflation component rate will be set

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Don't know if I can stand another 6 months of 0 rate.

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March CPI-U is posted = 238.132
Base line for next change (September) = 237.945
Total inflation for Oct+Nov+Dec+Jan+Feb+Mar = 0.08%

If fixed rate is 0% - we will have new bond rate 0.16%
If you buy before May 1 - your rate will be 1.64% for the first 6 Month then 0.26% for the next 6 Month, and 0.1% fixed for the life of the bond.
I think starting May1 fixed rate will be set above 0% -  will see.  

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Has the new rate been announced?

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Just now: https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res...

Fixed Rate stays at 0.1%, for a total rate of 0.26%.

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Fiscal Service Announces New Savings Bonds Rates, Series I to Earn 0.26%, Series EE to Earn 0.10%

The composite rate for Series I Savings Bonds is a combination of a fixed rate, which applies for the 30-year life of the bond, and the semiannual inflation rate. The 0.26% composite rate for I bonds bought from May 2016 through October 2016 applies for the first six months after the issue date. The composite rate combines a 0.10% fixed rate of return with the 0.16% annualized rate of inflation as measured by the Consumer Price Index for all Urban Consumers (CPI-U). The CPI-U increased from 237.945 in September 2015 to 238.132 in March 2016, a six-month change of 0.08%.

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Ahh the joys of loaning money to the government and getting nothing in return.

The CPI index will never have inflationary numbers... even if prices are rising at 5-10%... thus this is a guaranteed bad bet.

If the US government remotely cared about helping protect people from inflation they wouldn't create it in the first place.

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i think inflation will come, you just need to be patient.. very patient

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cheezedawg said:   
Glitch99 said:   
capcdoc said:   I've never understood the 5k limit myself. If the gov't REALLY wants help with the deficit, raise the maximum to 250k or so. Plenty of people would get these instead of the current ~1% in a bank account...
How would this help the deficit? It'd merely finance it, which hasnt been a problem thusfar.

Lol I was going to say the same thing. This doesn't change the size of the deficit, only who owns it.

But this comment does show how common it is for people to misunderstand government debt. Government debt is a private sector asset. These I-Bonds are assets that we can purchase.


People complain about China owning American since they hold all the bonds (they don't, but people say that). I always ask them why this is a problem. I say sell China all the bonds in the world, and then inflate the heck out of the money supply and make their bonds worthless. Of course, there would be collateral damage in the American economy from everyone else that holds dollar assets (or these bonds). But that just means we should encourage everyone to leverage themselves with Chinese loans. Unfortunately, I think some in China have caught on to this potential. So now they just come over and buy up assets instead. We could have pulled one over on them!

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April CPI-U is posted = 239.261
Base line for next change (March) = 238.132
Total inflation for Apr = 0.47%

We have FIVE more months to go before new I-bonds inflation component rate will be set

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I was wondering with ibonds if you are the co-owner but the social security number of only the primary holder is on the savings bond, will the bank still cash it?
Also, if one of the co-owner on the ibond dies do you need to notify the treasury to get the bond reissued or can you just leave it alone until you redeem the bond

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Both co-owners of a savings bond can cash it. The primary named owner will get the 1099-INT form at the end of the tax year. Beneficiaries cannot cash the bond unless proof of the death of the named owner is provided.

You do not have to re-register the bond if one of the named owner dies. You can re-register it, but you will need to send a certified copy of the death certificate of the other owner. You can leave it alone and cash it out later. Of course, if you die before the bond is cashed (no surviving owners or beneficiaries), then your estate or probate will determine who can cash it.

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ok but what if the primary named owner is dead then the other co-owner did not cash the bond until a few years later, will the primary owner still get the 1099-int or can the co-owner have the 1099-int with the living co-owner on it

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The Bureau of Public Debt (BPD) will issue a Form 1099-INT to the first named owner of the bond unless you request a change to the SSN assigned to the bond. The SSN of the deceased primary owner may be set to "deceased" by SSA, but I do not think that will stop BPD from still using it on the Form 1099-INT unless you notify them about the death of the primary owner. The issue of the tax implications of the interest reported on the Form 1099-INT will depend on whether the interest was reported periodically over the years by the primary owner before death or if it is reported as a lump sum. If the bond interest was reported in previous tax years, then the Schedule B of Form 1040 would have reported those amounts and that would need to be subtracted from the total interest paid figure on Form 1099-INT.

You should read IRS publications 17, 550, and 559 that discusses the Federal Income tax, Investment income, and survivor, executor, and administrator guidelines with tax reporting.

Replacing or reissuing an I bond 

replacing or reissuing a EE bond 

Correcting the SSN on a bond 

Death of a bond owner (paper bond) 

Note that for an electronic bond, the person who died will have a freeze placed on the online account (assuming that you notify the BPD about the death).

EE bonds tax considerations 

I bonds tax considerations 

The math and the guidelines of reporting the interest can be convoluted when a primary owner dies. The ideal situation is to redeem all of the bonds of the primary owner before he/she dies. I had a situation with an invalid parent that I took care of at home and I went through all of the paper bonds that were registered as the primary owner and cashed them out (even though some of them had not reached the full maturity period of 30 years).  The invalid parent was not earning much income, so I cashed all of the bonds to avoid having the interest to be taxed to another SSN, so all of the interest was tax free.

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This is from my experience of cashing in savings bonds for the last 30 years. I have never cashed in a Treasury Direct savings bond so it might be different cashing the bond online.

The Bureau of Public Debt has never issued me a 1099-INT. The bank where I redeemed the bond always issues the 1099-int.

The interest gets charged to the Social Security number of the account where you deposit the funds from the savings bonds. The social security number on the bond is irrelevant. I have cashed in bonds with my name but my mothers SSN and I have always gotten the 1099-INT. In fact, since August 2006 the SSN has been masked on the Savings Bond.

From the Treasury Direct site: Incorrect Social Security Number -- EE bonds don't need to be reissued to correct a Social Security Number. The Social Security Number does not establish ownership or tax liability. It's used to find savings bond records if, for example, the bonds are lost and the owner has not kept a record of serial numbers. Be sure to keep a record of all your bonds including serial numbers.

https://www.treasurydirect.gov/indiv/research/indepth/ebonds/res...

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which bank do you use to cash the bonds and do they issue the int immediately

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RagingBull said:   which bank do you use to cash the bonds and do they issue the int immediately
 

I have used Chase, Bank of America and some local banks.  You must have an account at the bank.  I have found that no bank will cash a savings bond without an account.

The bank will issue the 1099-INT in January of the next year. No bank will issue an immediate 1099-INT though they will tell you exactly how much interest they paid out.

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May CPI-U is posted = 240.236
Base line for next change (March) = 238.132
Total inflation for Apr+May = 0.88%

We have FOUR more months to go before new I-bonds inflation component rate will be set

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I apologize in advance as I basically purchased the I-Bonds in Oct 2011 (issue date Oct 1, 2011) and have ignored it ever since.
I know I should have withdrawn in Jan 2016 to avoid getting any penalty but I didn't.

So now I believe the rules are (copied from forbestadvice.com):

Best Time to Buy I Bonds: Near the end of the month. Make sure you leave enough time for funds to clear.
Best Time to Sell I Bonds: At the start of the month since interest for the prior month is computed on the first of each month. Interest is not earned for fractional months.

Since my fixed component is 0% I was going to sell and then re-buy to get a non 0% fixed interest component.
I believe I should sell on roughly Oct 1-4 depending on when Sept interest is added.
I believe I would meet the 5 year requirement and would no longer have to forfeit 3 months of interest.

Can someone let me know if I miscalculated by 1 month and should sell in November instead? Thanks in advance!

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You are correct about the 5 year thing and the timing- selling and buying in October will work fine.

Note, though, that you may or may not want to do that. Here's the reason:

If you bought in October, then for October-March, you receive the variable rate that started on the prior May 1, then for April-September, you receive the variable rate that started on the prior November 1. What that means is that through September 30th, your bond is receiving 1.54% + the fixed rate of 0%.that started in May 2011. If you then sell and buy in October, the first 6 months of your new bond will receive a variable rate of .16% from May 2016 + a fixed rate of .1%= .26% for the first 6 months. If you wait until November to sell and rebuy, in October you'll get .16%, then you'll get whatever the new November fixed + variable rate is.

Basically, if inflation is significantly higher for the May-October period this year (which you'll know before the end of October), it may be worth waiting until November to sell and buy. You won't know the new fixed rate ahead of time- it could be 0%instead of 0.1%- but you could lock in a significantly higher variable rate for the first half year of the new bond.

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June CPI-U is posted = 241.038
Base line for next change (March) = 238.132
Total inflation for Apr+May+Jun = 1.22%

We have THREE more months to go before new I-bonds inflation component rate will be set

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Bonds 1 (21.75kB)
Disclaimer
I have 4 bonds as reflected in the attached. Can someone explain what I should do with them (and why).  Some are held in my "gift box".  I can't even recall why I purchased them this way to be honest.

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I hope there will be a higher rate this time around. Lately the rates had been dismal

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DavidScubadiver said:   I have 4 bonds as reflected in the attached. Can someone explain what I should do with them (and why).  Some are held in my "gift box".  I can't even recall why I purchased them this way to be honest.
  
I would sell them. The interest you are earning does not even make up for inflation. You are losing purchasing power while loaning money to the government (just like I predicted 5 years ago on page 1). 

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Assuming I want an asset that will "keep up" with inflation should it rear its ugly head, would I sell them today and repurchase? I have to assume these bonds serve some purpose. The one at 1.54% is topping my savings account so no harm in holding that over putting it into a savings account.

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masteraleph said:   You are correct about the 5 year thing and the timing- selling and buying in October will work fine.

Note, though, that you may or may not want to do that. Here's the reason:

If you bought in October, then for October-March, you receive the variable rate that started on the prior May 1, then for April-September, you receive the variable rate that started on the prior November 1. What that means is that through September 30th, your bond is receiving 1.54% + the fixed rate of 0%.that started in May 2011. If you then sell and buy in October, the first 6 months of your new bond will receive a variable rate of .16% from May 2016 + a fixed rate of .1%= .26% for the first 6 months. If you wait until November to sell and rebuy, in October you'll get .16%, then you'll get whatever the new November fixed + variable rate is.

Basically, if inflation is significantly higher for the May-October period this year (which you'll know before the end of October), it may be worth waiting until November to sell and buy. You won't know the new fixed rate ahead of time- it could be 0%instead of 0.1%- but you could lock in a significantly higher variable rate for the first half year of the new bond.

  
Thanks!  That's good advice, I remember reading about that in these threads in the past.  I will hold it in my money market, based on MoneyOCD's posts, I believe the variable rate should be higher if I buy in November.

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DavidScubadiver said:   Assuming I want an asset that will "keep up" with inflation should it rear its ugly head, would I sell them today and repurchase? I have to assume these bonds serve some purpose. The one at 1.54% is topping my savings account so no harm in holding that over putting it into a savings account.
They do serve a purpose. It finances government spending at an incredibly low interest rate. Their gain is your loss.

There is a huge incentive for the federal government to minimize the CPI numbers through statistical manipulation and hedonics to portray low inflation. If they had to admit higher inflation numbers the federal reserve would have to stop buying bonds and raise interest rates. That would cause housing and stock prices to fall and revert any "progress" that was made since the last recession. Rents are rising 15% per year in many areas and many health insurance companies are looking to raise rates over 20% in 1 year.
 

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