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I Went All in on I Bonds 7.12% Interest Rate | I Bonds 2022 | IBonds Treasury Direct - YouTube
Channel: Wolves Of Investing
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i just went all in on i bonds also known as series聽
i savings bonds ibonds are currently paying 7.12聽percent
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interest which is way higher than the 0.55聽
interest i'm currently getting from my high聽聽
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interest savings account in this video i'm聽
first going to give a high level overview of聽聽
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ibonds second i'm going to go over how you can buy聽
i bonds from the us treasury at treasurydirect.gov聽聽
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and finally i'm going to go over my personal game聽
plan for investing in i-bonds all this right after
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i am not a financial advisor this video聽
is for entertainment purposes only聽聽
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learn to invest like a wolf at your own risk聽
what's up everyone welcome back to my channel聽聽
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wolves of investing my name is donnie nguyen
and i'm the founder of wolves of investing聽聽
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if you're new i talk about stocks spacs bitcoin聽
options and anything on my mind related to聽聽
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investing if you want to learn how to achieve聽
financial freedom through investing be sure to聽聽
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click on that subscribe button and notification聽
bell if you haven't yet and please remember to聽聽
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drop a like on this video if you enjoy it as it聽
truly helps out the channel so without further ado聽聽
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let's get right into it what are i bonds i聽
bonds or formerly called series i savings bonds聽聽
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are issued every six months by the u.s.聽
treasury the interest consists of two parts聽聽
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the base interest which remains fixed for the life聽
of the bond and the inflation-based interest which聽聽
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changes every six months based on inflation the聽
combined interest is called the composite interest聽聽
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currently the base interest is zero percent聽
but because of the recent rise in inflation聽聽
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the inflation interest is 7.12 percent so the聽
composite interest you would receive from ibonds聽聽
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today is 7.12 percent this interest will change聽
in may and of course no one can tell the future聽聽
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so we won't know what it's going to be聽
until that happens interest on an i bond聽聽
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is paid every six months from the purchase聽
date and added to the principal value and聽聽
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interest is then earned on the new principal
so the interest does compound semi-annually聽聽
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what is the maximum you can invest in i-bonds each聽
united states citizen with the social security聽聽
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number can invest up to ten thousand dollars per聽
calendar year in i bonds from treasurydirect.gov聽聽
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however you can also buy an additional five聽
thousand dollars in paper i bonds per year聽聽
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with your tax return talk to your tax advisor聽
or visit treasurydirect.gov for more information聽聽
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you can also buy eye bonds as gifts for other聽
people including children so if you have children聽聽
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this is something you can consider the gift will聽
count towards the recipient's annual maximum of聽聽
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ten thousand dollars in electronic bonds and five聽
thousand dollars in paper bonds via tax return聽聽
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so you can potentially gift up to fifteen thousand聽
dollars per person if you have that kind of money聽聽
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and we're feeling generous what is the minimum聽
holding period for ibonds if you buy i-bonds聽聽
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you must hold them for a minimum of one year聽
so it doesn't work great for an emergency fund聽聽
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but if you're pretty sure you don't need the money聽
in the next year i think that is much better than聽聽
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the 0.55 percent that most bank savings are paying聽
these days if for some reason you really need to聽聽
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withdraw the money in the first year you can聽
contact treasury direct from within your account聽聽
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and plead your case but there's no guarantee that聽
they will allow you to withdraw before 12 months聽聽
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so that's something you want to聽
consider before investing in ibonds
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the maximum time that you can hold an i-bond聽
is 30 years another thing to know is that if聽聽
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you don't hold the i-bond for at least five聽
years you will lose the last three months of聽聽
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interest so that's something to consider if you聽
decide to hold the i bond for less than five years聽聽
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how low can the composite rate go can we lose our聽
principal investment in case there's deflation in聽聽
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a deflationary environment the inflation interest聽
rate of the i-bond can go negative but the聽聽
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composite interest is capped at zero so there's聽
no way we can lose our principal investment in聽聽
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an i-bond unless the u.s treasury stops paying聽
its debts the us treasury has a track record of聽聽
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paying back its debts for over 200 years so in my聽
opinion this is not something worth worrying about聽聽
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so now that you know what i-bonds are how do聽
you actually buy them first you need to open an聽聽
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account with treasurydirect at treasurydirect.gov聽
this is the official site from the u.s. government聽聽
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if you go through any site other than聽
treasurydirect.gov it could be a scam so make sure聽聽
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you're at treasurydirect.gov you're going to need聽
your tax id number which is your social security聽聽
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number or your ein you'll need your email address聽
you'll need your bank account and routing number聽聽
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in order to fund your account in addition to聽
your password and other account security you will聽聽
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be required to select three security questions聽
even though there are 10 security questions you聽聽
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only need to choose three it's really important聽
that you remember your three security questions聽聽
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because you may get locked out of your account if聽
you answer these three questions wrong i actually聽聽
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got locked out of my account when i answered the聽
questions incorrectly a number of times and it was聽聽
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a huge hassle to call and get my account unlocked聽
i was literally put on hold for about an hour聽聽
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before i could unlock my account and i needed to聽
answer the three security questions over the phone聽聽
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in order to get it unlocked so do yourself a favor聽
and remember your three security questions alright聽聽
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so after you set up your account you'll get聽
assigned an account number from treasurydirect.gov聽聽
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go to the login page and enter your account number聽
they will then send you a one-time password to the聽聽
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email address registered to your account after聽
you enter your one-time password you'll then get聽聽
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a screen with the keyboard in which you'll have聽
to type in your actual password and of course聽聽
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if you're asked for your security questions聽
you'll have to correctly answer those as well聽聽
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now that you're in your treasury direct account聽
simply select buy direct then select series i聽聽
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savings bonds enter the purchase amount that you聽
want to buy the minimum is twenty five dollars聽聽
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and the max as i mentioned earlier is ten thousand聽
dollars you can just leave the purchase frequency聽聽
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default alone to buy at the earliest date聽
available which is usually within one business day聽聽
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or you can choose from a variety of purchase聽
options like future date and repeat purchases聽聽
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then just click submit and that's it as you聽
can see from my account i purchased a total聽聽
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of ten thousand dollars in i bonds which is聽
displayed here what are the risks of ibonds聽聽
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first i bonds are guaranteed by the full聽
faith and credit of the united states聽聽
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so if you think that the u.s. treasury isn't聽
going to pay up then that's a risk it's a super聽聽
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small risk in my opinion since the u.s treasury聽
has over a 200 year track record of paying back聽聽
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its debts the u.s treasury is considered the聽
risk-free rate by professional investors like聽聽
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warren buffett so although it's a risk it's not聽
something i would lose any sleep over a second risk聽聽
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is the minimum one year holding period as i聽
mentioned earlier barring extreme circumstances聽聽
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there's no way to withdraw your money in the聽
first 12 months so if you're going to need聽聽
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your money in the next 12 months it's probably聽
not a good idea to buy i-bonds a third risk is聽聽
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the variable inflation rate that changes every聽
six months right now the composite rate is 7.12聽percent
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but there's no way to know for sure what it will聽
be when it changes in may so that's something to聽聽
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consider a fourth risk is the three months we聽
lose if we don't hold the i bonds for at least聽聽
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five years so we do need to take that into account聽
when calculating our interest so what is my game聽聽
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plan for investing in ibonds as i mentioned聽
earlier i bought ten thousand dollars worth聽聽
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of i-bonds this year to take advantage of the 7.12聽
percent i personally don't think that inflation is聽聽
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going to get under control this year which is why聽
i decided to go all in in my opinion as long as an聽聽
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ibond is paying at least three percent higher than聽
an interest savings account it's worth considering聽聽
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as an investment the reason i want it to be聽
three percent higher than my savings account rate聽聽
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is to give myself a margin of safety for the聽
risk of having my money tied up for 12 months聽聽
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the risk of losing three months of interest if聽
i don't hold the i-bond for at least five years聽聽
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and the risk of getting a lower interest rate when聽
the i-bond adjusts every six months also the fed聽聽
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is starting to raise short-term interest rates聽
so i expect my high interest savings account rate聽聽
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to steadily rise over the next 12 months in terms聽
of holding period after the first year i would聽聽
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just consider the i bond as part of my emergency聽
fund since i'll be able to freely withdraw it by聽聽
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then i hope to hold it for at least five years so聽
that i don't have to take the three-month interest聽聽
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penalty and i could potentially hold it for the聽
entire 30 years other than an emergency the only聽聽
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reason i can think of where i would want to聽
make a withdrawal earlier than five years聽聽
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is if the composite interest rate becomes lower聽
than my high interest savings account alright so聽聽
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thank you for making it to the end of my video聽
if you want more insights into my portfolios聽聽
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or if you want to just support the channel check聽
out my patreon a link is in the video description聽聽
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and as always a huge thank you to the awesome聽
patrons that have already joined and also be聽聽
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sure to check out my free discord to talk about聽
stocks spacs bitcoin and other investments with聽聽
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other members of the wolves of investing community聽
a link is also in the video description all right聽聽
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so let me know what you think about ibonds聽
drop me a line in the comments be sure to leave聽聽
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a like on this video before leaving thanks聽
for watching and i will see you next time
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