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Savings I Bonds November 2024: 1.90% New Inflation Rate Prediction

Savings I Bonds are a unique, low-risk investment backed by the US Treasury that pay out a variable interest rate linked to inflation. With a holding period from 12 months to 30 years, you could own them as an alternative to bank certificates of deposit (they are liquid after 12 months) or bonds in your portfolio.

New inflation numbers were just announced at BLS.gov, which allows us to make an early prediction of the November 2024 savings bond rates a couple of weeks before the official announcement on the 1st. This also allows the opportunity to know exactly what an October 2024 savings bond purchase will yield over the next 12 months, instead of just 6 months. You can then compare this against a November 2024 purchase.

New inflation rate prediction. March 2024 CPI-U was 312.332. September 2024 CPI-U was 315.301, for a semi-annual inflation rate of 0.95%. Using the official composite rate formula:

Composite rate formula: [Fixed rate + (2 x semiannual inflation rate) + (fixed rate x semiannual inflation rate)]

This results in the variable component of interest rate for the next 6 month cycle being ~1.90% to 1.91%, depending on the fixed rate.

Tips on purchase and redemption. You can’t redeem until after 12 months of ownership, and any redemptions within 5 years incur an interest penalty of the last 3 months of interest. A simple “trick” with I-Bonds is that if you buy at the end of the month, you’ll still get all the interest for the entire month – same as if you bought it in the beginning of the month. It’s best to give yourself a few business days of buffer time. If you miss the cutoff, your effective purchase date will be bumped into the next month. (You should always sell at the very beginning of the month.)

Buying in October 2024. If you buy before the end of October, the fixed rate portion of I-Bonds will be 1.30%. You will be guaranteed a total interest rate of 1.30 + 2.98 = 4.28% for the next 6 months. For the 6 months after that, the total rate will be 1.30 + 1.91 = 3.21%.

Buying in November 2024. If you buy in November 2024, you will get ~1.91% plus a newly-set fixed rate for the first 6 months. The new fixed rate is officially unknown, but is loosely linked to the real yield of short-term TIPS with some reductions. My rough guess is somewhere between 0.9% and 1.2%. The current real yield on short-term TIPS is lower than it was during the last reset, when the fixed rate was set at 1.3%. Every six months after your purchase, your rate will adjust to your fixed rate (set at purchase) plus a variable rate based on inflation.

If you have an existing I-Bond, the rates reset every 6 months depending on your specific purchase month. Everyone will eventually get this variable rate. Your bond rate = your specific fixed rate (based on purchase month, look it up here) + variable rate (total bond rate has a minimum floor of 0%).

Buy now or wait? Between those two options, I would buy in October as you’ll likely get a higher fixed rate and a decent initial 6-month rate. However, I actually don’t plan to buy any savings bonds this year. The yields are simply not very interesting as compared to other options. Short-term, it’s better to go T-Bills with the state tax exemption. For my inflation-protected needs, I have been buying longer-term TIPS instead to lock in the higher current 2%+ real yields (in tax-deferred).

Unique features and considerations. I have a separate post on reasons to own Series I Savings Bonds, including inflation protection, tax deferral, exemption from state income taxes, and potential tax benefits if used toward qualified educational expenses.

The main drawback is hassle. You can only buy new savings bonds through TreasuryDirect.gov, which is limited in its customer service resources and features. Conducting certain transactions may require a medallion signature guarantee which requires a visit to a physical bank or credit union and snail mail. If your password is compromised, they will not replace any lost or stolen savings bonds. The juice may not be worth the squeeze when you can own individual Treasury bonds or TIPS within any full-service brokerage account. (Finding a bank that will redeem a physical paper savings bond at all can be difficult these days.)

Over the years, I have accumulated I-Bonds and consider it part of the inflation-linked bond allocation inside my long-term investment portfolio. However, after converting all my paper bonds to electronic versions earlier this year, I have been selling the lower fixed rate bonds and reinvesting in 2%+ real yield TIPS.

Annual purchase limits. The annual purchase limit is now $10,000 in online I-bonds per Social Security Number. For a couple, that’s $20,000 per year. As of 2024. you can only buy online at TreasuryDirect.gov, after making sure you’re okay with their security protocols and user-friendliness. (No more tax refund savings bonds.) Technically, the purchase limits are per Social Security Number or Employer Identification Number. For those looking for another way to expand their purchasing power, that means you can also buy for a child, grandchild, LLC, or a trust.

Bottom line. Savings I bonds are a unique, low-risk investment that are linked to inflation and only available to individual investors. You can now only purchase them online at TreasuryDirect.gov. For more background, see the rest of my posts on savings bonds.

[Image: 1942 US Savings Bond poster – source]

Pepper Rewards App: 8% Back on Amazon Gift Cards for 15 Days (New Users) + Recurring Flash Sales

(10/14 Only Flash Sales: Sam’s Club 12X/12% Off (Works at Walmart!), Kohl’s 18X, Airbnb 14X, Stubhub 20X, IKEA 18X. See new offers daily in-app with the Inbox 📩 envelope icon. Confirm the Boosts on screen before you click “Buy gift card”, as quantities may be limited (see example below). 2,000 points = $1.

10/13 Only Flash Sales (for reference): Amazon Fresh 10X/10% Off (Redeems exactly the same as regular Amazon GC). Cabela’s 20X, Uber 10X, Columbia 18X, XBOX 20X.

10/10 Only Flash Sales: Lowe’s gift cards 14X/14% Off. REI gift cards 18% Off. Amazon Fresh 10% Off (Redeems exactly the same as regular Amazon GC). Netflix 20% Off, Macy’s 20% Off. Petsmart 20% off.

10/9 Only Flash Sales: Amazon 10X/10% off Flash Sale today only, Ulta/Southwest 20% off, Kohl’s/Champs 18% off. )

Pepper continues to offer up “flash sales” that offer big discounts on gift cards from Amazon, REI, Sam’s Club, and so on. Plus you still get whatever credit card rewards from the Pepper purchase. Examples are Amazon at 12X/12% back, Sam’s Club at 10% back, IKEA 18% back, Airbnb 14% back in the form of points. Stock up quickly when you see the sale in the app. Redeem instantly into your respective store accounts, if you wish. (Tip: The math will work out. Every 2,000 points is worth $1 in future gift cards. 10,000 points = $5, and so on. Must redeem in increments of $5.)

Here’s the current offer for new Pepper users:

  • Download the Pepper Rewards app and be sure to enter a referral code 588494 on the first screen when joining.
  • Get double points for the first 15 days. The limits vary, but I was able to buy up to $500 in Amazon gift cards per day and $2,000 per month. The standard is 4% back on Amazon, for a total of 8% back (you might get more on select stores that go on sale). Be sure to finish up your purchases within the 15-day window.
  • You’ll also earn rewards from using your credit card for purchase. Use a 2% or better cash back rewards card, or use it to satisfy a credit card bonus spending requirement that is even better than 2%.

Pepper is an iOS and Android app that sells discounted, new gift cards in exact amounts that are delivered instantly on your phone. This lets you to wait until the moment before purchase when you already have the final purchase price (in-person or online), and then go buy a discounted gift card via the app down to the penny. The main problem with gift cards is when you don’t use up the entire balance. This helps to avoid the waste.

Bank of America Credit Cards – 2% More Rewards Day on Thursday 11/7/2024

Update for 2024, promo is back again with limit of $50 extra per card. Bank of America has a one-day credit card promotion called "More Rewards Day" on Thursday, 11/7/24. Depending on your BofA credit card type (all consumer and business cards … [Read the rest]

Robinhood HOOD Week Promo: 3% IRA, 2% Margin, 1% ACAT Bonus (10/16-10/27)

Robinhood brokerage app is jumping on the week-long promo trend and just teased Robinhood HOOD Week ("HOOD" is their stock symbol) from October 16, 2024 to October 27, 2024. The front page is vague but inside the full terms you can see exactly what … [Read the rest]

October Deals Week: Amazon Prime Big Deal Days, Target Circle Week, Walmart Deals

I guess all the major retailers decided that we needed another big coordinated event in October, so here we are again. I looked through the sales and here are a few things that caught my eye. Amazon has refreshed some of their free trials and … [Read the rest]

MMB Portfolio Dividend & Interest Income Update – October 2024 (Q3)

Here’s my quarterly income update as a companion post to my October 2024 asset allocation & performance update. I prefer to track the income produced as an alternative metric to performance. The total income goes up much more gradually and … [Read the rest]

Top 10 Best Credit Card Bonus Offers – October 2024 (Updated)

Updated with new $1,000 value+ offers! That space in your wallet or purse is valuable, and you should be the one to get that value. By being smart and picky, you can find offers worth $500+ for a single card, all to encourage you to apply and try … [Read the rest]

Vanguard Adds Automatic, Recurring Dollar-Based ETF Investments

Vanguard has rolled out the ability to make automatic, recurring purchases of Vanguard ETFs using fractional shares (dollar-based purchases, $1 minimum) inside their in-house brokerage account. Trade commissions are still zero. I know that some … [Read the rest]

Chase Sapphire Preferred® Card Review: Limited-Time Offer, Now Up to $1,050 in Chase Travel(SM) Value.

Updated with new, improved offer with an additional $300 statement credits towards Chase Travel(SM) purchases within your first year. This is on top of the previous 60,000 point offer. Ha, I guess Chase really wants everyone to have this card if … [Read the rest]

OnPath Federal Credit Union: 7.00% APY Rewards Checking + $100 Refer-a-Friend Bonus

OnPath Federal Credit Union has a High-Yield Rewards Checking account that pay the top 7.00% APY on balances up to $10,000 if you satisfy the qualifying activities each month, as well as an improved $100 refer-a-friend bonus. I've mentioned this … [Read the rest]

Kudos App: $20 Referral Bonus, 20% Cash Back at PetSmart, 15% Back at VRBO, TripAdvisor, Booking.com

Updated with new 5X promo through October 31st. Kudos is a new mobile app and browser extension that aims to enhance your existing credit card rewards when shopping. It does this by tracking all your rewards credit cards and recommending the best … [Read the rest]

MMB Portfolio Asset Allocation & Performance Update – October 2024 (Q3)

Here's my 2024 Q3 update for our primary investment holdings, including all of our combined 401k/403b/IRAs and taxable brokerage accounts but excluding our house and smaller side portfolio of self-directed investments. Following the concept of skin … [Read the rest]