Make a Payment Rates About Careers Contact Locations

Bonds, Bonds, Bonds

November 9, 2022 Over the past few weeks and months, I had seen several news reports about I Bonds, usually with a corresponding endorsement of their attractiveness as an investment in today’s market. I’ll be honest, my only experience with bonds was a savings bond that I received as a child – and I can remember waiting for what seemed like an eternity until I (and the bond) were old enough to cash in. After that I haven’t given them much thought until the past couple weeks. I started with the basics – two different types of bonds, EE & I. EE was the type I had prior experience with the fixed rate bond. Right now (11/1/22 through 4/30/23) EE bonds are issued at a 2.10% rate. I bonds are a variable rate bond comprised of a fixed rate – which never changes for the life of the bond, and the variable (or inflation) rate, which is adjusted every 6 months. Right now (11/1/22 through 4/30/23) I bonds are issued at a 6.89% rate. Both types of bonds earn interest monthly, and that interest is compounded semiannually, with a maximum term of 30 years. You can purchase both types of bonds electronically between $25 and $10,000 in increments down to the penny. The bonds are required to be held for a minimum of 12 months prior to redemption, and if you redeem them within five years you lose the last three months of interest earned. With both types you have the option of reporting each year’s interest earned on your taxes or defer reporting until the bond is cashed in, when the all the interest would be reported for your taxes. You can also cash in any amount of the bond greater than $25 (and would receive the corresponding interest earned), providing that if the bond is only partially redeemed that a minimum of $25 dollars remain.  Both types of bonds are also eligible for a tax exclusion if used to pay for higher education, provided several restrictions are met. There are a few differences between the two types, outside of how they earn interest. For EE bonds, the annual maximum limit is $10,000 per person (tracked by SSN). For I bonds the annual maximum limit is $10,000 in electronic bonds, but an additional $5,000 could be purchased in paper bonds with your tax refund (using IRS Form 8888), for a total of $15,000. And the I bond limits are per entity, not per person. So, a person using their SSN could buy separately from a business using their EIN. So, after learning this, and taking some time to mull it over – reflecting on what we had previously discussed with our Summit Financial Advisor, we decided we aren’t ready to pull the trigger on bonds. For us there is some lower hanging fruit in working to maximize our employer sponsored retirement accounts that would be more beneficial that we are working to focus on. But this effort did help give us a greater understanding of prioritization and strategies about what options are available should our financial situation change. You might also be interested in As the year comes to a close, so does Season 14 of Project Money. In preparation for writing our final blog post we reflected over what has occurred over the last 6 months and the strides our family has made. Below, in no particular order, are a few of the highlights from our journey: In the last week we had to take Robin’s car, a 2019 VW Atlas, in for a couple of recall notices we had received. Nothing completely out of the ordinary and wouldn’t have any out-of-pocket costs – so it wasn’t something that we had put much thought or effort into – outside of scheduling the appointment. Unfortunately, what we anticipated being a ~1 hour visit ended up being 5+ hours and spurred a larger discussion. One of the topics we had mentioned in our posts from earlier this year was an employee stock purchase plan offered by Robin’s employer. We have never participated in any stock purchase plans before through our employers but being a bit more vigilant as part of Project Money, we decided to give the program further consideration. Being part of Project Money has pushed our family to take a more active role in managing our finances, necessitating weekly conversations that have spurred growth from both educational and fiscal perspectives. One of the topics we had discussed was micro investing, investing small sums of money in fractional shares of stock or ETFs. With Thanksgiving behind us, the countdown to Christmas has “officially” begin. This year, as part of our Project Money journey, we have been planning to approach things a bit differently when it comes to our holiday budgeting. I had been putting this off for a few weeks/months now, optimistic that Fall might stretch on a little bit longer – but this past week’s winter weather brought with it a reality check, it’s time to replace the tires on my vehicle. I’ve just started to research pricing at local tire shops and trying to narrow down which tire choices will be the best value – both in related to cost and performance in wet/winter weather. I’ve also been checking some of the retail stores, Costco in particular. Over the last few weeks, we have been working to refocus, and get back to some of the basics as we start to head into the end of year holiday season. Over the past few weeks and months, I had seen several news reports about I Bonds, usually with a corresponding endorsement of their attractiveness as an investment in today’s market. I’ll be honest, my only experience with bonds was a savings bond that I received as a child – and I can remember waiting for what seemed like an eternity until I (and the bond) were old enough to cash in. After that I haven’t given them much thought until the past couple weeks. We have reached the point of the year where we have one foot firmly planted into heating season and thought we would reflect on what energy saving tips we have used previously and are currently using to help reduce our bills. Featured Products Certificates Checking Accounts Home Equity Loans Home Loans Business Banking Certificates Checking Accounts Home Equity Loans Home Loans Business Banking Financial Education Upcoming Events Programs Tools & Calculators On-demand Webinars Podcasts Upcoming Events Programs Tools & Calculators On-demand Webinars Podcasts About Equity in Money™ About Summit Careers News Community Giving Equity in Money™ About Summit Careers News Community Giving Help & Support Contact Us Member Support Center Schedule an Appointment Find a Branch Contact Us Member Support Center Schedule an Appointment Find a Branch Please read the following before proceeding to: The website you are about to visit is solely the responsibility of the merchant or other party providing the site. The content of this third-party site, including materials and information, is solely the responsibility of the provider of the site. The Credit Union is not responsible for any such third-party content. Any transactions that you enter into with a vendor, merchant or other party that you access through this third-party site are solely between you and that vendor, merchant or other party. The Credit Union does not endorse the content contained in this third-party site, nor the organization publishing the site, and hereby disclaims any responsibility for such content. The Credit Union Privacy Policy does not apply to this third-party site, and for further information you should consult the privacy disclosures of the third-party site. NCUA Insurance Estimator Privacy, Security & Accessibility Rates, Fees, Terms & Disclosures Routing Number *  The Wisconsin's #1 Mortgage Lender designation is based on the number of loans in 2022, gathered from the Home Mortgage Disclosure Act data compiled annually by the Consumer Financial Protection Bureau. The results of the data were obtained through the LEI: 254900NTAC4H10MGSU23 **  SBA Lender of the Year Award for Credit Unions as awarded by the Small Business Administration of Wisconsin in 2023. Copyright 2024 © Summit Credit Union. All rights reserved. If you are using a screen reader and are having problems using this website, please call 608-243-5000 for assistance. Insured by NCUA