📢 Get 15% off our brand-new bond courses thru 11:59PM ET on 4/30/2024 for Financial Literacy Month - enter coupon code bondfans2024 at checkout - see links below for more details! Bond Beginners (our foundational-level bond course): www.diamondnestegg.com/bond-beginners Bond Masters (our intermediate-level bond course): www.diamondnestegg.com/bond-masters Or get both & save $100: www.diamondnestegg.com/home#_paa2isucf 👉 Join our super-supersaver membership for regular market updates & monthly live member Q&As th-cam.com/channels/nexoc6tvesvcCEzZhmI-Ag.htmljoin >>>>>>>>>> WATCH NEXT Our Bond Courses vs TH-cam Membership | Which Is Right For You: th-cam.com/video/H5h4Eyh0hjo/w-d-xo.html Bond Masters Course Sneak Peak | How To Build A Bond Ladder: th-cam.com/video/p90IDmXn19s/w-d-xo.html >>>>>>>>>> Here is the overview for Bond Beginners: 1. Bond Basics What A Bond Is & How A Bond Works Why Invest In Bonds New Issue vs Secondary Market Bonds Interest Rates & Bond Prices Current Yield & Yield To Maturity Always Remember This! Buying At Par, Above Par & Below Par Different Types Of Bonds Wrap-Up 2. The Risks Of Bond Investing Seven Key Bond Risks Credit Risk Interest Rate Risk Reinvestment Risk/Call Risk Inflation Risk Liquidity Risk Currency Risk & Country Risk Bond Risk Mitigation Strategies Wrap-Up 3. US Treasuries Overview What Are US Treasuries Why Invest In Treasuries Where Can You Buy Treasuries How Are Treasuries Taxed Wrap-Up 4. Treasury Bills What Are Treasury Bills (T-Bills) When Do T-Bill Auctions Happen Where Should You Buy At Auction Auto-Roll When Buying At Auction Where To Find Recent Auction Results High Rate vs Investment Rate Reopening Auctions Cash Management Bills (CMBs) Buying & Selling On Secondary Market Wrap-Up 5. Treasury Notes & Bonds What Are Treasury Notes & Bonds When Do Auctions Happen Buying Treasury Notes & Bonds Auction High Yield vs Interest Rate Floating Rate Notes (FRNs) Treasury Zeros (STRIPS) Wrap-Up 6. TIPS (Inflation-Protected) What Are TIPS When Do TIPS Auctions Happen Nominal vs Real Yields Negative Yields How Do You Adjust TIPS For Inflation Taxes On Phantom Income Secondary Market Liquidity Wrap-Up 7. I-Bonds (Inflation-Protected) What Are I-Bonds How Does I-Bond Interest Work I-Bonds vs TIPS The Annual I-Bond Limit Wrap-Up 8. Agency Bonds The Universe Of Bonds What Are Agency Bonds How Are Agency Bonds Taxed Treasuries vs Agencies Who Might Want To Consider Agencies Yield-To-Call & Yield-To-Worst Where Can You Buy Agency Bonds Wrap-Up 9. Municipal Bonds Our Bond Universe Gets More Complex What Are Municipal Bonds How Safe Are Munis How Are Munis Taxed The De Minimis Rule Social Security & Medicare Premiums Treasuries, Agencies & Munis Who Might Want To Consider Munis Wrap-Up 10. Corporate Bonds Our Bond Universe Is Complete What Are Corporate Bonds How Safe Are Corporates Corporate Bond Hierarchies Five Key Features Of Corporate Bonds How Are Corporates Taxed Treasuries vs Corporates, Etc. Who Might Want To Buy Corporates Wrap-Up >>>>>>>>>> Here is the overview for Bond Masters: 1. Stocks vs Bonds Historical Performance Are Bonds Really Less Volatile Why Invest In Bonds Accumulation vs Decumulation Allocation of Stocks vs Bonds Wrap-Up 2. Which Bonds Might Be Right For You Treasuries & Other Types of Bonds Nominal vs Real Yields Inflation vs Non-Inflation-Protected Taxable vs Tax-Advantaged Accounts Wrap-Up 3. Bond Ladders & Other Bond Strategies Normal vs Inverted Yield Curve What Is A Bond Ladder 5 Important Bond Laddering Questions Laddering When Rates Are Rising Laddering When Rates Are Falling Laddering When Rates Are Uncertain What Is A Bullet What Is A Barbell Wrap-Up 4. Holding to Maturity vs Selling Early Why Hold to Maturity When To Sell Early Before Maturity Tax Implications Of Selling Early Wrap-Up 5. Individual Bonds, Bond Funds, Etc. Why Buy Individual Bonds Why Buy Bond Funds Bond Fund Considerations Key Bond Fund Concepts CDs vs Treasuries Other High-Yield Investments Wrap-Up 6. Our B.E.S.T. Model Portfolios By Age Our B.E.S.T Model Portfolios By Age Model Portfolios In The Industry B.E.S.T Model Portfolio Difference How Much Do You Need To Retire? How I Use The Rules of 100, 110, & 120 B.E.S.T Model Portfolios (20s) B.E.S.T Model Portfolios (30s & 40s) B.E.S.T Model Portfolios (50s & 60s) B.E.S.T Model Portfolios (70s+) Wrap-Up 7. The Decumulation Phase What Is The Decumulation Phase? Bear Markets & Recessions What Can You Do In Bad/Bear Markets Decumulation Tax Considerations The 4% Rule The Bucket Strategy The Flooring Approach Jen’s Bucket Strategy With A Twist Wrap-Up >>>>>>>>>> Get 15% off our brand-new bond courses thru 11:59PM ET on 4/30/2024 for Financial Literacy Month - enter coupon code bondfans2024 at checkout - see links below for more details! Bond Beginners (our foundational-level bond course): www.diamondnestegg.com/bond-beginners Bond Masters (our intermediate-level bond course): www.diamondnestegg.com/bond-masters Or get both & save $100: www.diamondnestegg.com/home#_paa2isucf >>>>>>>>>> Sources: www.treasurydirect.gov/savings-bonds/tax-information-ee-i-bonds/using-bonds-for-higher-education/ home.treasury.gov/policy-issues/financing-the-government/interest-rate-statistics www.treasurydirect.gov/savings-bonds/i-bonds/ >>>>>>>>>> Thanks for visiting our personal finance channel! We hope this content will help fast-track your financial journey! Everyone's financial journey is different. Please note that: 1) there are questions/ comments which I will not be able to answer without fully understanding your financial, personal & other circumstances & 2) we will not ask you to call us or send us money in the comments on this channel or any of our other social media accounts, so if you see comment(s) along those lines, it is most likely spam - PLEASE DO NOT ENGAGE WITH SPAMMERS OR GIVE OUT YOUR PERSONAL INFORMATION FOR YOUR OWN SAFETY.
Thanks very much for providing this video! I just bought some of the 5 year TIPS after 10 a.m. EST from Fidelity, using a rollover IRA account (although there was a warning Fidelity could have closed this at 10 a.m.). Using an IRA will mean that I won’t have to pay either the real tax or the phantom tax. I plan to hold the 5-year TIPs to maturity.
Great overview, Jennifer! It's material like this that makes the course totally worth it! 👍 I'm all in on I-Bonds this year. Like you said, it's a perfect element in an overall emergency savings fund, serving a dual purpose of offering inflation protection and a store of wealth. Redeeming through Treasury Direct is super simple. I've been redeeming my older I-Bonds with a lower fixed rate to get the current higher rate. The redemption takes about two days. I do like your three letter acronym - SSS: Safe, Stable, and Simple. It reminds me your three C's: Cost, Clarity, and Control. You can make a little dictionary of three letter acronyms. Call it the DiamondNest Egg Dictionary! 🙂
I participated in the 5 year TIP auction today. In July 2024, which will be five years after purchasing some IBonds in my treasury direct account, with a fixed rate of .5%, I will sell them. I have frequently traded TIPs in my Roth IRA accounts but will never buy them when the real yield is negative. I sold all of my TIPs bought at auction in Roth IRA accounts that had positive yields when the real yields turned negative, allowing me to profit from those sales. An example was the purchase of a 1.875% coupon at auction (10 years) that I sold at 120.45. The real yield to the purchaser was -.89%.
Please consider preparing a video on TIPS ETF. Would an investor get better liquidity with an ETF over a TIP? What are the downsides? - As always, good work!!!
I would have to buy TIPS in a taxable account. So I prefer I bonds, since they defer the taxes, and I'll defer until I finish my Roth conversions but have not started Social Security, cashing most in at that time. And then I'll buy TIPS. So, I bonds while working, I bonds while doing Roth conversions, then redeem the I bonds and buy TIPS, then start Social Security.
Thank you. Can anyone please share exactly how TIPs taxes for interest and inflation adjusted principal are considered in tax deferred accounts such as a 401K? Do these taxes just accumulate and are paid when the TIPS bond reaches maturity?
From what I've read, no taxes are due inside the taxdeferred or tax exempt accounts, just like no taxes are due on other securities. Only when withdrawals are made from the account will taxes be due at your then current tax rate.
Besides paying taxes on interest and principle increases, what is so bad about holding TIPS in a taxable account? It’s not practical for me to allocate funds in my retirement accounts to TIPS, so the only option is a taxable account. However, I worry that there is something I am missing that I haven’t figured out yet with TIPS in a taxable account.
TIPS deliver interest twice a year and there’s also tax on the increase in the principal even though you don’t get any of the principal until the TIPS is sold or when it matures. If the TIPS are held in a retirement account, there’s no direct tax on them.
For those of us who sold I bonds with a zero fixed interest component and are trying to decide whether to buy new ones this month or wait to see if the May FI rate looks like it will be slightly higher, will you be doing an updated video in the next few days giving us your thoughts on this? Thanks.
Can I ask u a question? Where to buy the TIPS? And You said max to buy I bond only 10,000 / year for each person ? If I want to buy series I saving bonds and 30 years bonds. Can I buy 10k each or can only 5k for each? Thanks for your videos; very useful
I Bond and 30 year Bond are a different thing. They are not the same Ibond You can redeem after 1 year, earn interest up to 30 year. 10k max per year. 30 year if Buy ina bokerage account You can sell it anytime, but not on treasury direct, max per year is 10 million.
I have a question: I have a callable bond with a GSE @ 6.25% which matures in 2044. Today they paid me $3750 in principle. I assume they can do this because it's callable. A non-callable bond couldn't just make random principle payments, could they?
Dana, Thanks for weighing in. We did hold I Bonds for over a year. We understand we lost 3-months interest over 1 year and before 5. Was wondering if my delivering gift in 2024 and subsequent sale because of current low interest rate at time, approx. 3.48% at time would limit another I Bond purchase in current year if I wanted to buy more in 2024. @@dmulvany
@@amandaackermann3965, turns out that a gift does count towards the purchase limitation, according to the TreasuryDirect web site, even though the recipient had not purchased the gift herself.
It really depends on you overall tax bracket after deductions I have tips in Roth IRA and I have tips in Treasury Direct (not tax advantaged), one of the reasons being that I can purchase TIPS in multiples of $100, I would not recommend putting them on a conventional IRA as you would lose the State Tax exclusion.
📢 Get 15% off our brand-new bond courses thru 11:59PM ET on 4/30/2024 for Financial Literacy Month - enter coupon code bondfans2024 at checkout - see links below for more details!
Bond Beginners (our foundational-level bond course): www.diamondnestegg.com/bond-beginners
Bond Masters (our intermediate-level bond course): www.diamondnestegg.com/bond-masters
Or get both & save $100: www.diamondnestegg.com/home#_paa2isucf
👉 Join our super-supersaver membership for regular market updates & monthly live member Q&As th-cam.com/channels/nexoc6tvesvcCEzZhmI-Ag.htmljoin
>>>>>>>>>>
WATCH NEXT
Our Bond Courses vs TH-cam Membership | Which Is Right For You: th-cam.com/video/H5h4Eyh0hjo/w-d-xo.html
Bond Masters Course Sneak Peak | How To Build A Bond Ladder: th-cam.com/video/p90IDmXn19s/w-d-xo.html
>>>>>>>>>>
Here is the overview for Bond Beginners:
1. Bond Basics
What A Bond Is & How A Bond Works
Why Invest In Bonds
New Issue vs Secondary Market Bonds
Interest Rates & Bond Prices
Current Yield & Yield To Maturity
Always Remember This!
Buying At Par, Above Par & Below Par
Different Types Of Bonds
Wrap-Up
2. The Risks Of Bond Investing
Seven Key Bond Risks
Credit Risk
Interest Rate Risk
Reinvestment Risk/Call Risk
Inflation Risk
Liquidity Risk
Currency Risk & Country Risk
Bond Risk Mitigation Strategies
Wrap-Up
3. US Treasuries Overview
What Are US Treasuries
Why Invest In Treasuries
Where Can You Buy Treasuries
How Are Treasuries Taxed
Wrap-Up
4. Treasury Bills
What Are Treasury Bills (T-Bills)
When Do T-Bill Auctions Happen
Where Should You Buy At Auction
Auto-Roll When Buying At Auction
Where To Find Recent Auction Results
High Rate vs Investment Rate
Reopening Auctions
Cash Management Bills (CMBs)
Buying & Selling On Secondary Market
Wrap-Up
5. Treasury Notes & Bonds
What Are Treasury Notes & Bonds
When Do Auctions Happen
Buying Treasury Notes & Bonds
Auction High Yield vs Interest Rate
Floating Rate Notes (FRNs)
Treasury Zeros (STRIPS)
Wrap-Up
6. TIPS (Inflation-Protected)
What Are TIPS
When Do TIPS Auctions Happen
Nominal vs Real Yields
Negative Yields
How Do You Adjust TIPS For Inflation
Taxes On Phantom Income
Secondary Market Liquidity
Wrap-Up
7. I-Bonds (Inflation-Protected)
What Are I-Bonds
How Does I-Bond Interest Work
I-Bonds vs TIPS
The Annual I-Bond Limit
Wrap-Up
8. Agency Bonds
The Universe Of Bonds
What Are Agency Bonds
How Are Agency Bonds Taxed
Treasuries vs Agencies
Who Might Want To Consider Agencies
Yield-To-Call & Yield-To-Worst
Where Can You Buy Agency Bonds
Wrap-Up
9. Municipal Bonds
Our Bond Universe Gets More Complex
What Are Municipal Bonds
How Safe Are Munis
How Are Munis Taxed
The De Minimis Rule
Social Security & Medicare Premiums
Treasuries, Agencies & Munis
Who Might Want To Consider Munis
Wrap-Up
10. Corporate Bonds
Our Bond Universe Is Complete
What Are Corporate Bonds
How Safe Are Corporates
Corporate Bond Hierarchies
Five Key Features Of Corporate Bonds
How Are Corporates Taxed
Treasuries vs Corporates, Etc.
Who Might Want To Buy Corporates
Wrap-Up
>>>>>>>>>>
Here is the overview for Bond Masters:
1. Stocks vs Bonds
Historical Performance
Are Bonds Really Less Volatile
Why Invest In Bonds
Accumulation vs Decumulation
Allocation of Stocks vs Bonds
Wrap-Up
2. Which Bonds Might Be Right For You
Treasuries & Other Types of Bonds
Nominal vs Real Yields
Inflation vs Non-Inflation-Protected
Taxable vs Tax-Advantaged Accounts
Wrap-Up
3. Bond Ladders & Other Bond Strategies
Normal vs Inverted Yield Curve
What Is A Bond Ladder
5 Important Bond Laddering Questions
Laddering When Rates Are Rising
Laddering When Rates Are Falling
Laddering When Rates Are Uncertain
What Is A Bullet
What Is A Barbell
Wrap-Up
4. Holding to Maturity vs Selling Early
Why Hold to Maturity
When To Sell Early Before Maturity
Tax Implications Of Selling Early
Wrap-Up
5. Individual Bonds, Bond Funds, Etc.
Why Buy Individual Bonds
Why Buy Bond Funds
Bond Fund Considerations
Key Bond Fund Concepts
CDs vs Treasuries
Other High-Yield Investments
Wrap-Up
6. Our B.E.S.T. Model Portfolios By Age
Our B.E.S.T Model Portfolios By Age
Model Portfolios In The Industry
B.E.S.T Model Portfolio Difference
How Much Do You Need To Retire?
How I Use The Rules of 100, 110, & 120
B.E.S.T Model Portfolios (20s)
B.E.S.T Model Portfolios (30s & 40s)
B.E.S.T Model Portfolios (50s & 60s)
B.E.S.T Model Portfolios (70s+)
Wrap-Up
7. The Decumulation Phase
What Is The Decumulation Phase?
Bear Markets & Recessions
What Can You Do In Bad/Bear Markets
Decumulation Tax Considerations
The 4% Rule
The Bucket Strategy
The Flooring Approach
Jen’s Bucket Strategy With A Twist
Wrap-Up
>>>>>>>>>>
Get 15% off our brand-new bond courses thru 11:59PM ET on 4/30/2024 for Financial Literacy Month - enter coupon code bondfans2024 at checkout - see links below for more details!
Bond Beginners (our foundational-level bond course): www.diamondnestegg.com/bond-beginners
Bond Masters (our intermediate-level bond course): www.diamondnestegg.com/bond-masters
Or get both & save $100: www.diamondnestegg.com/home#_paa2isucf
>>>>>>>>>>
Sources:
www.treasurydirect.gov/savings-bonds/tax-information-ee-i-bonds/using-bonds-for-higher-education/
home.treasury.gov/policy-issues/financing-the-government/interest-rate-statistics
www.treasurydirect.gov/savings-bonds/i-bonds/
>>>>>>>>>>
Thanks for visiting our personal finance channel! We hope this content will help fast-track your financial journey! Everyone's financial journey is different. Please note that: 1) there are questions/ comments which I will not be able to answer without fully understanding your financial, personal & other circumstances & 2) we will not ask you to call us or send us money in the comments on this channel or any of our other social media accounts, so if you see comment(s) along those lines, it is most likely spam - PLEASE DO NOT ENGAGE WITH SPAMMERS OR GIVE OUT YOUR PERSONAL INFORMATION FOR YOUR OWN SAFETY.
Thanks for your hard work to get this video out just in time before the TIPS auction!
You are an excellent teacher, and thank you for helping us to better understand the complicated world of I bonds/Tips.
If taxes on principal value of TIPs are due yearly, does that mean if the principal value goes down, you'll be able to write off the loss yearly?
Excellent! Very informative and on time, thank you!
Great video. Very clear.
Excellent presentation.
Thank you!! Clear and informative, as always.
Thanks very much for providing this video! I just bought some of the 5 year TIPS after 10 a.m. EST from Fidelity, using a rollover IRA account (although there was a warning Fidelity could have closed this at 10 a.m.).
Using an IRA will mean that I won’t have to pay either the real tax or the phantom tax. I plan to hold the 5-year TIPs to maturity.
Thanks for the information.
Very helpful video. Nice job.
Thank you for the video. You're right, I Bonds are a lot simpler to understand.😅
Great overview, Jennifer! It's material like this that makes the course totally worth it! 👍
I'm all in on I-Bonds this year. Like you said, it's a perfect element in an overall emergency savings fund, serving a dual purpose of offering inflation protection and a store of wealth. Redeeming through Treasury Direct is super simple. I've been redeeming my older I-Bonds with a lower fixed rate to get the current higher rate. The redemption takes about two days.
I do like your three letter acronym - SSS: Safe, Stable, and Simple. It reminds me your three C's: Cost, Clarity, and Control. You can make a little dictionary of three letter acronyms. Call it the DiamondNest Egg Dictionary! 🙂
One day Boris - we will get to the book & the swag!
I participated in the 5 year TIP auction today. In July 2024, which will be five years after purchasing some IBonds in my treasury direct account, with a fixed rate of .5%, I will sell them. I have frequently traded TIPs in my Roth IRA accounts but will never buy them when the real yield is negative. I sold all of my TIPs bought at auction in Roth IRA accounts that had positive yields when the real yields turned negative, allowing me to profit from those sales. An example was the purchase of a 1.875% coupon at auction (10 years) that I sold at 120.45. The real yield to the purchaser was -.89%.
I have learned so much from you! Thank you!
As a near retiree, at what point (if ever) do we increase the holdings in 10 - 20 year treasuries to capture the higher rates?
For saving for retirement, how would you decide whether/how much to hold in TIPS versus a total bond market index fund?
Please consider preparing a video on TIPS ETF. Would an investor get better liquidity with an ETF over a TIP? What are the downsides? - As always, good work!!!
I would have to buy TIPS in a taxable account. So I prefer I bonds, since they defer the taxes, and I'll defer until I finish my Roth conversions but have not started Social Security, cashing most in at that time. And then I'll buy TIPS. So, I bonds while working, I bonds while doing Roth conversions, then redeem the I bonds and buy TIPS, then start Social Security.
Thank you very much for this. How would you buy TIPS on secondary market?
your schwab, fidelity, etc account is where you can buy them
Is this a good way to get into treasuries. They call it a checking account, but sweep into treasuries. Thanks for your opinion
Is it too late to buy the 5 year TIPS or 20 year Bond this week? And what is the CUSIP for each?
It's too late for the 20-Year. At 8:29AM today (4/18/2024) you can still buy the 5-Year TIPS on Fidelity. CUSIP 91282CKL4.
would another difference be that ibonds interest compounds while tips interest does not (I assume they don't because they pay out their interest? ) ?
Thank you for giving me the courage to dip my paws into I-bonds, T-bills and TIPS!
Update: TIPS as of 5/15/24 is +0.85% (+11% annualized).
Thank you. Can anyone please share exactly how TIPs taxes for interest and inflation adjusted principal are considered in tax deferred accounts such as a 401K? Do these taxes just accumulate and are paid when the TIPS bond reaches maturity?
From what I've read, no taxes are due inside the taxdeferred or tax exempt accounts, just like no taxes are due on other securities. Only when withdrawals are made from the account will taxes be due at your then current tax rate.
Besides paying taxes on interest and principle increases, what is so bad about holding TIPS in a taxable account? It’s not practical for me to allocate funds in my retirement accounts to TIPS, so the only option is a taxable account. However, I worry that there is something I am missing that I haven’t figured out yet with TIPS in a taxable account.
TIPS deliver interest twice a year and there’s also tax on the increase in the principal even though you don’t get any of the principal until the TIPS is sold or when it matures. If the TIPS are held in a retirement account, there’s no direct tax on them.
Enjoy your videos. How can I rollout I-Bonds out of treasury website to say Schwab or Fidelity? without selling I-Bonds after few years ? Thanks.
You cannot. I bonds are only available in Treasury Direct and must stay in Treasury Direct.
For those of us who sold I bonds with a zero fixed interest component and are trying to decide whether to buy new ones this month or wait to see if the May FI rate looks like it will be slightly higher, will you be doing an updated video in the next few days giving us your thoughts on this? Thanks.
Hi Laurie - Our fixed rate projection still stands at 1.30% currently.
@@DiamondNestEgg Thank you!
Why not just keep buying t-bills?
Can I ask u a question? Where to buy the TIPS? And You said max to buy I bond only 10,000 / year for each person ? If I want to buy series I saving bonds and 30 years bonds. Can I buy 10k each or can only 5k for each? Thanks for your videos; very useful
I Bond and 30 year Bond are a different thing. They are not the same
Ibond You can redeem after 1 year, earn interest up to 30 year. 10k max per year.
30 year if Buy ina bokerage account You can sell it anytime, but not on treasury direct, max per year is 10 million.
WooHoo 👍
I have a question: I have a callable bond with a GSE @ 6.25% which matures in 2044. Today they paid me $3750 in principle. I assume they can do this because it's callable. A non-callable bond couldn't just make random principle payments, could they?
Correct, a non-callable bond would generally not be able to make random principal repayments.
Question, If I gifted my spouse a I bond this year and she cashed it for $10g, is she blocked out for buying another I bond this year? Thanks!
It’s not possible to sell an I bond in less than a year. The required holding period is a year.
Dana, Thanks for weighing in. We did hold I Bonds for over a year. We understand we lost 3-months interest over 1 year and before 5. Was wondering if my delivering gift in 2024 and subsequent sale because of current low interest rate at time, approx. 3.48% at time would limit another I Bond purchase in current year if I wanted to buy more in 2024. @@dmulvany
The gift is considered the $10,000 max purchase. So she cannot buy anymore in the calendar year that she receives the gift.
@@amandaackermann3965, turns out that a gift does count towards the purchase limitation, according to the TreasuryDirect web site, even though the recipient had not purchased the gift herself.
Thank you for the info!
@@amandaackermann3965
Should Tips be bought in a tax advantage account (IRA or Roth)?
In Best case yes
It really depends on you overall tax bracket after deductions I have tips in Roth IRA and I have tips in Treasury Direct (not tax advantaged), one of the reasons being that I can purchase TIPS in multiples of $100, I would not recommend putting them on a conventional IRA as you would lose the State Tax exclusion.