1 00:00:33,650 --> 00:00:38,799 Suze: November 9th, 2023. Welcome everybody to the Women and Money 2 00:00:38,810 --> 00:00:43,080 Suze: podcast as well as everybody smart enough to listen. 3 00:00:43,090 --> 00:00:44,639 KT: Why are you, why are you laughing? 4 00:00:44,650 --> 00:00:47,009 Suze: Because you have the biggest smile on your face and 5 00:00:47,020 --> 00:00:48,590 Suze: I can't figure out why. 6 00:00:48,680 --> 00:00:51,500 Suze: And I look over at you and you're staring at 7 00:00:51,509 --> 00:00:55,169 Suze: me with this incredible smile. So I laugh anyway. 8 00:00:55,180 --> 00:00:58,020 KT: Well, you make me smile, you make me smile, but 9 00:00:58,029 --> 00:01:01,659 KT: I'm really smiling because when you hear what I picked out, 10 00:01:01,669 --> 00:01:04,900 KT: you're gonna go crazy. You're not gonna go crazy. 11 00:01:05,110 --> 00:01:12,330 Suze: Alright. So this is the Ask KT and Suze Anything podcast. 12 00:01:12,339 --> 00:01:15,768 Suze: And today as I promised you on Sunday 13 00:01:16,370 --> 00:01:20,599 Suze: that we were getting a lot, a lot, a lot 14 00:01:20,610 --> 00:01:25,449 Suze: of questions on series I Bonds and what you should 15 00:01:25,459 --> 00:01:28,930 Suze: do about them. Because on November 1st, actually, it was 16 00:01:28,940 --> 00:01:33,289 Suze: October 31st. But that's besides the point on those dates, 17 00:01:33,449 --> 00:01:41,000 Suze: the interest rate for Series I Bonds changed to 5.27%. However, 18 00:01:41,599 --> 00:01:44,330 Suze: the big change was as you know, 19 00:01:47,559 --> 00:01:51,860 Suze: series I bonds are made up of a variable interest 20 00:01:51,870 --> 00:01:54,989 Suze: rate that is only good for six months. And the 21 00:01:55,000 --> 00:02:01,440 Suze: annualized interest rate was quoted at 3.94%. But the fixed 22 00:02:01,449 --> 00:02:06,089 Suze: interest rate. Why are you laughing? Oh, here we go. 23 00:02:06,489 --> 00:02:09,389 Suze: Here we go. We're just starting, 24 00:02:10,800 --> 00:02:15,169 KT: sorry. I don't mean to laugh but Suze, I have 25 00:02:15,179 --> 00:02:18,570 KT: to tell you when I started reading these, I felt 26 00:02:18,580 --> 00:02:22,339 KT: so good. Do you know why I knew I wasn't alone. 27 00:02:23,339 --> 00:02:28,080 KT: This is one topic. I just cannot figure out or 28 00:02:28,089 --> 00:02:29,539 KT: get a hint that 29 00:02:29,679 --> 00:02:34,639 Suze: a few times ago we stopped investing in series I bonds. 30 00:02:39,250 --> 00:02:42,799 Suze: the new interest rate was made up of two really 31 00:02:42,809 --> 00:02:44,229 Suze: three components, but 32 00:02:44,559 --> 00:02:50,139 Suze: the composite was 5.27%. But the big hubbub is about 33 00:02:50,350 --> 00:02:56,179 Suze: the fixed interest rate, which means it is forever of 1.30%. 34 00:02:56,389 --> 00:03:00,029 Suze: And many of you own series I bonds. Those who 35 00:03:00,038 --> 00:03:05,579 Suze: bought the 7.12% 1 or the 9% ones have a 0% 36 00:03:05,589 --> 00:03:06,419 Suze: interest rate. 37 00:03:06,660 --> 00:03:10,479 Suze: So you have been hearing from, I don't even know who. 38 00:03:10,490 --> 00:03:13,649 Suze: But anyway, you have been hearing you should cash out 39 00:03:13,660 --> 00:03:21,440 Suze: your 0% fixed rate bonds and buy these new ones. 40 00:03:21,490 --> 00:03:26,600 Suze: So that has created a flurry of questions that Miss 41 00:03:26,610 --> 00:03:31,149 Suze: Travis has fielded. And it's gonna ask me right now 42 00:03:31,160 --> 00:03:34,970 KT: And listen everybody. I'm not gonna do names or intros 43 00:03:34,979 --> 00:03:35,759 KT: or anything. 44 00:03:36,050 --> 00:03:38,889 KT: Cute. I'm getting right to the point here. The reason 45 00:03:38,899 --> 00:03:41,919 KT: is I've selected 12. I don't know if we can 46 00:03:41,929 --> 00:03:43,309 KT: get through all of them, but 47 00:03:43,960 --> 00:03:47,860 KT: it's just so confusing. So here we go. All right. Ready. 48 00:03:49,100 --> 00:03:50,589 Suze: What if I said no? 49 00:03:51,130 --> 00:03:54,750 KT: We're going, we're going for it, Suze. Why is everyone 50 00:03:54,759 --> 00:03:57,419 KT: saying that I should sell my I bonds? I bought 51 00:03:57,429 --> 00:04:02,130 KT: in November 2021 and in May 22 when you first 52 00:04:02,139 --> 00:04:04,940 KT: told us to, I love the interest rate that I 53 00:04:04,949 --> 00:04:08,199 KT: got at the time. So why should I be selling 54 00:04:08,210 --> 00:04:10,169 KT: them now? Question number one. 55 00:04:10,179 --> 00:04:13,809 Suze: All right. And the reason that many people are saying 56 00:04:13,820 --> 00:04:14,929 Suze: that you should 57 00:04:15,419 --> 00:04:19,719 Suze: is that when we first started to talk about Series 58 00:04:19,730 --> 00:04:23,869 Suze: I Bonds way back when like 2, 3 years ago. Now 59 00:04:23,880 --> 00:04:27,828 Suze: whatever it is, the truth of the matter is interest 60 00:04:27,839 --> 00:04:32,420 Suze: rates in the world were at like 0%. Maybe a 61 00:04:32,428 --> 00:04:36,170 Suze: treasury was at one or 2%. But Series, I bonds 62 00:04:36,178 --> 00:04:38,950 Suze: were giving us 7% 9%. 63 00:04:39,329 --> 00:04:44,489 Suze: But that was the variable rate that changes every six months. 64 00:04:44,500 --> 00:04:48,359 Suze: As I said just a little bit ago, it changes 65 00:04:48,369 --> 00:04:53,109 Suze: every November and May 1st. Ok. 66 00:04:54,238 --> 00:04:57,058 Suze: Series I bonds, as I also just said, are made 67 00:04:57,070 --> 00:05:01,178 Suze: up of two components, the variable rate and then there 68 00:05:01,190 --> 00:05:07,219 Suze: is a fixed rate that never changes the fixed rate 69 00:05:07,440 --> 00:05:12,980 Suze: on the series I bonds that you were buying is 0%. 70 00:05:13,890 --> 00:05:18,489 Suze: When your I bond interest rate changes every six months, 71 00:05:18,660 --> 00:05:22,409 Suze: you don't get to participate on those I bonds in 72 00:05:22,420 --> 00:05:26,600 Suze: what the new fixed rate is. The new fixed rate 73 00:05:26,609 --> 00:05:29,079 Suze: is 1.3%. 74 00:05:29,750 --> 00:05:33,690 Suze: So the interest rate that you are getting when the 75 00:05:33,700 --> 00:05:37,458 Suze: interest rate applies to you on your money is only 76 00:05:37,470 --> 00:05:41,690 Suze: going to be approximately 3.94%. 77 00:05:42,609 --> 00:05:47,269 Suze: So what everybody is saying is why not redeem them 78 00:05:47,940 --> 00:05:52,839 Suze: by new ones? And then you would be at 5.27% 79 00:05:52,850 --> 00:05:58,719 Suze: versus 3.94%. That's why they're saying you should do it, 80 00:05:58,769 --> 00:06:00,039 Suze: KT did that make sense? 81 00:06:00,059 --> 00:06:03,118 KT: It did. But I have to barrel through these because 82 00:06:03,329 --> 00:06:07,640 KT: these questions are, they sound like they're all the same, 83 00:06:07,649 --> 00:06:10,910 KT: but they're actually not. So the next one is I 84 00:06:10,920 --> 00:06:13,809 KT: have 10,000 of a zero fixed I bond 85 00:06:14,570 --> 00:06:18,618 KT: $10,000. Do I have to redeem it all at once? 86 00:06:19,470 --> 00:06:22,869 Suze: Any I bond, it doesn't matter when you bought it. 87 00:06:22,880 --> 00:06:26,820 Suze: What's going on with the interest rates? You never have 88 00:06:26,829 --> 00:06:31,829 Suze: to redeem 100% of that I bond. You can redeem 89 00:06:31,839 --> 00:06:35,730 Suze: if you have a $10,000 I bond, you can redeem 90 00:06:35,738 --> 00:06:41,190 Suze: $2000 1000 dollars, any amount of money that you want. However, 91 00:06:41,339 --> 00:06:45,609 Suze: normally you have to leave at least $25 in there 92 00:06:45,619 --> 00:06:48,130 Suze: for your I bond to still be valid. Yeah. 93 00:06:48,519 --> 00:06:51,729 KT: The third question if I change from an I bond 94 00:06:51,738 --> 00:06:56,708 KT: that is offering me a fixed rate of 0.90%. Should 95 00:06:56,720 --> 00:07:01,769 KT: I redeem now to get the new fixed rate of 1.3%? 96 00:07:01,779 --> 00:07:07,769 Suze: Absolutely not listen, this strategy of redeeming your I bonds 97 00:07:07,779 --> 00:07:11,049 Suze: to now purchase this new I bond that was just 98 00:07:11,059 --> 00:07:14,529 Suze: issued at a 1.3 fixed percent. 99 00:07:15,079 --> 00:07:19,559 Suze: Only in my opinion, really, really makes sense if you 100 00:07:19,570 --> 00:07:26,549 Suze: have a 0% fixed interest rate attached to your particular 101 00:07:26,559 --> 00:07:27,179 Suze: I bond. 102 00:07:27,760 --> 00:07:33,980 Suze: If it's at 0.4% or the 0.90% especially the 0.90% 103 00:07:33,989 --> 00:07:37,739 Suze: it makes no sense. What so ever? All right. 104 00:07:37,910 --> 00:07:42,299 KT: So this next one will address that. Exactly, Suze. I've 105 00:07:42,309 --> 00:07:46,290 KT: been investing currently in C DS since I live in 106 00:07:46,299 --> 00:07:49,459 KT: a tax free state. However, I also listen 107 00:07:49,545 --> 00:07:54,635 KT: to you and purchase $10,000 of I bonds back in 108 00:07:54,644 --> 00:08:01,035 KT: both 2021 and 2022 at a zero fixed rate. I 109 00:08:01,045 --> 00:08:04,684 KT: don't need this money. Should I redeem both of them 110 00:08:04,695 --> 00:08:08,695 KT: this year and buy the 1.3 fixed I bond. 111 00:08:08,774 --> 00:08:11,204 Suze: The truth is if you don't need this money 112 00:08:11,750 --> 00:08:18,130 Suze: and you were investing in I bonds for the inflation protection, 113 00:08:18,290 --> 00:08:21,170 Suze: not just for the interest rate that you were getting 114 00:08:21,500 --> 00:08:25,109 Suze: and are you better off taking this money and putting 115 00:08:25,119 --> 00:08:29,410 Suze: it in treasuries or C DS and locking up a 116 00:08:29,420 --> 00:08:33,400 Suze: higher interest rate? Are you better off doing that or 117 00:08:33,409 --> 00:08:38,099 Suze: was your objective truthfully... Not just to get the highest 118 00:08:38,109 --> 00:08:42,710 Suze: interest rate, but to have an investment that protects you 119 00:08:42,719 --> 00:08:47,440 Suze: against inflation, which is what Series I bonds are supposed 120 00:08:47,450 --> 00:08:48,559 Suze: to do. Now, 121 00:08:48,919 --> 00:08:53,020 Suze: I get all of you are just freaked out about 122 00:08:53,030 --> 00:08:56,739 Suze: this 1.3% fixed rate. 123 00:08:57,359 --> 00:09:02,630 Suze: So in this particular case, if your objective is to 124 00:09:02,640 --> 00:09:05,020 Suze: have inflation protection, 125 00:09:05,780 --> 00:09:09,909 Suze: then yes, you should redeem the two bonds that you 126 00:09:09,919 --> 00:09:16,669 Suze: have to repurchase this 1.3% fixed rate bond. However, 127 00:09:17,369 --> 00:09:20,869 Suze: remember there are many ways to put in more than 128 00:09:20,880 --> 00:09:25,369 Suze: $10,000 but just let's assume in your case, the maximum 129 00:09:25,380 --> 00:09:28,630 Suze: that you can put in to an I bond is 130 00:09:28,640 --> 00:09:30,590 Suze: $10,000 a year. 131 00:09:31,239 --> 00:09:37,030 Suze: So I personally would probably redeem one this year and 132 00:09:37,039 --> 00:09:43,059 Suze: reinvest it because remember when you redeem it, you are 133 00:09:43,070 --> 00:09:47,819 Suze: going to owe income taxes on it on the interest 134 00:09:47,830 --> 00:09:51,500 Suze: that you earned. So if you redeem both of them, 135 00:09:51,700 --> 00:09:55,359 Suze: now you're going to owe income taxes this year on 136 00:09:55,369 --> 00:09:58,130 Suze: the interest that you owed on both of them. 137 00:09:58,369 --> 00:10:02,830 Suze: And since you can't buy more than $10,000 this year, 138 00:10:03,200 --> 00:10:08,510 Suze: why not redeem one this year next year, January 1st, 139 00:10:08,520 --> 00:10:11,710 Suze: we're only like two months away from it, redeem the 140 00:10:11,719 --> 00:10:18,349 Suze: other one and buy this 1.36% bond I bond next year. 141 00:10:18,460 --> 00:10:22,210 Suze: That's what I would do. You just always, everybody wanna 142 00:10:22,219 --> 00:10:25,830 Suze: make sure that when you redeem 143 00:10:26,299 --> 00:10:32,358 Suze: your I bond that you are in the lowest interest 144 00:10:32,369 --> 00:10:36,119 Suze: rate that they're currently charging, you because remember you're going 145 00:10:36,130 --> 00:10:40,239 Suze: to have to pay a three month interest penalty. So 146 00:10:40,250 --> 00:10:42,580 Suze: you don't want to pay it if you were still 147 00:10:42,590 --> 00:10:46,809 Suze: making 6% on your I bond or whatever, you want to 148 00:10:46,820 --> 00:10:50,809 Suze: make sure your I bond is charging you in annualized 149 00:10:50,820 --> 00:10:53,739 Suze: like three point something percent. All right. 150 00:10:53,890 --> 00:10:54,919 KT: Ok. Next, 151 00:10:55,895 --> 00:11:01,074 KT: I've been told that the 1.3% fixed interest rate means 152 00:11:01,085 --> 00:11:05,705 KT: I can never earn less than 1.3% Suze, is that true? 153 00:11:05,794 --> 00:11:07,304 Suze: That's your quizzie KT! 154 00:11:07,655 --> 00:11:11,565 KT: Oh my God. I think the answer is no. 155 00:11:12,215 --> 00:11:14,765 Suze: Why would you say that? It's a fixed interest rate? 156 00:11:14,775 --> 00:11:17,674 KT: Because it said I've been told that the 1.3 fixed 157 00:11:17,684 --> 00:11:22,085 KT: interest rate means I can never earn less than 1.3%. 158 00:11:22,094 --> 00:11:23,645 Suze: Is that true? Yes or no? 159 00:11:26,179 --> 00:11:27,330 Suze: Yeah, that's true. 160 00:11:28,039 --> 00:11:29,969 Suze: You so... is it KT? 161 00:11:32,349 --> 00:11:33,159 KT: All right. 162 00:11:33,169 --> 00:11:34,700 KT: I'm a little bit confused. 163 00:11:34,789 --> 00:11:38,059 Suze: That's all right. You can because obviously whoever told this 164 00:11:38,070 --> 00:11:42,609 Suze: person that is also confused, it does not mean that 165 00:11:42,719 --> 00:11:47,780 Suze: please be aware everybody that the fixed interest rate 166 00:11:48,729 --> 00:11:53,109 Suze: isn't fixed. If the inflation rate all of a sudden 167 00:11:53,119 --> 00:11:59,039 Suze: starts to deflate and it's under the 1.3%. You could 168 00:11:59,049 --> 00:12:03,559 Suze: actually then get that interest rate decreased. The good part 169 00:12:03,570 --> 00:12:07,359 Suze: about an I bond is the interest rate can never go 170 00:12:07,369 --> 00:12:09,599 Suze: below 0%. 171 00:12:10,250 --> 00:12:12,919 Suze: So you can never have no KT, you can never 172 00:12:12,929 --> 00:12:17,200 Suze: have negative interest rates. It's possible like if you bought tips, 173 00:12:17,210 --> 00:12:20,619 Suze: you'd be in trouble so, and tips treasury and it 174 00:12:20,630 --> 00:12:21,510 Suze: doesn't matter. 175 00:12:21,580 --> 00:12:22,859 KT: I don't know what a tip is 176 00:12:23,359 --> 00:12:25,880 Suze: That's not what we're talking about right now. All right. 177 00:12:25,890 --> 00:12:26,520 Suze: Go on. 178 00:12:26,570 --> 00:12:29,039 KT: Ok. So question number six, 179 00:12:29,390 --> 00:12:32,330 KT: don't I get the new rate of I bonds when 180 00:12:32,340 --> 00:12:35,789 KT: my six months are up? So why should I redeem 181 00:12:35,799 --> 00:12:39,349 KT: any of them and pay a penalty and taxes? 182 00:12:39,359 --> 00:12:45,409 Suze: Because if you have an I bond that had a 0% 183 00:12:45,469 --> 00:12:51,049 Suze: fixed rate, you absolutely, every six months get whatever the 184 00:12:51,059 --> 00:12:54,250 Suze: new declared interest rate is, the variable one. 185 00:12:54,989 --> 00:13:01,770 Suze: However, you don't get the 1.30% fixed rate. So that 186 00:13:01,780 --> 00:13:06,069 Suze: would mean that when your bonds get credited with a 187 00:13:06,080 --> 00:13:10,539 Suze: new interest rate, they're only going to get the variable rate, 188 00:13:10,969 --> 00:13:14,179 Suze: which is 3.94%. 189 00:13:14,909 --> 00:13:20,210 Suze: So you're not getting the 5.27 annualized yield, you're getting 190 00:13:20,219 --> 00:13:27,520 Suze: the 3.94% annualized yield. That's a big difference. 191 00:13:28,619 --> 00:13:29,380 Suze: What's wrong? 192 00:13:29,390 --> 00:13:32,469 KT: So, so do I get the new rate? So you 193 00:13:32,479 --> 00:13:33,890 KT: don't get the new rate after... 194 00:13:33,919 --> 00:13:35,960 Suze: They get the new variable rate... 195 00:13:36,020 --> 00:13:36,619 KT: but you don't... 196 00:13:36,630 --> 00:13:40,200 Suze: They don't get to participate ever in the new fixed rate, 197 00:13:40,349 --> 00:13:41,319 Suze: the fixed rate. 198 00:13:41,330 --> 00:13:45,960 KT: So the big question here is, do you redeem them? 199 00:13:45,969 --> 00:13:47,840 KT: Like you have to kind of do a little bit 200 00:13:47,849 --> 00:13:49,849 KT: of calculating to see what... 201 00:13:49,859 --> 00:13:54,520 Suze: listen, if you have a Series I bond, that's at a 0% 202 00:13:54,830 --> 00:13:59,260 Suze: fixed rate. You past your one year period where you 203 00:13:59,270 --> 00:14:04,479 Suze: cannot redeem it and your three month interest penalty is 204 00:14:04,489 --> 00:14:09,179 Suze: really very low. You know, it's not even 1% really. 205 00:14:09,440 --> 00:14:14,609 Suze: If that is true. And your intention was listen to me, 206 00:14:14,619 --> 00:14:17,409 Suze: everybody to have an investment 207 00:14:17,780 --> 00:14:23,140 Suze: that was for inflation protection. You wanted an investment that 208 00:14:23,150 --> 00:14:27,679 Suze: was part of your fixed income portfolio along with C 209 00:14:27,690 --> 00:14:31,450 Suze: DS and treasuries and maybe preferred stocks and dividend stocks, 210 00:14:31,460 --> 00:14:37,109 Suze: whatever it may be, then truthfully, you should redeem and 211 00:14:37,119 --> 00:14:45,200 Suze: buy this new one. Absolutely. However, if that wasn't your intention, 212 00:14:45,729 --> 00:14:49,500 Suze: if your intention was simply to invest in I bonds 213 00:14:49,539 --> 00:14:54,020 Suze: to get the highest possible interest rates at the time, 214 00:14:54,559 --> 00:14:57,619 Suze: and you're really not interested in locking your money up 215 00:14:57,630 --> 00:15:01,750 Suze: with penalties for another five years. You're not interested in 216 00:15:01,760 --> 00:15:03,900 Suze: locking up your money where you cannot touch it at 217 00:15:03,909 --> 00:15:07,070 Suze: all for one year, which is what would be true. 218 00:15:07,080 --> 00:15:10,500 Suze: If you bought new ones with the money from your 219 00:15:10,510 --> 00:15:15,900 Suze: old ones, then you could redeem what you have right now, 220 00:15:15,909 --> 00:15:19,330 Suze: pay the taxes and penalties on it right now, 221 00:15:19,630 --> 00:15:25,049 Suze: but possibly take that money and buy certificates of deposit 222 00:15:25,059 --> 00:15:29,130 Suze: with it buy treasury notes or bonds with it or 223 00:15:29,140 --> 00:15:34,409 Suze: something else, you only redeem if you have a 0% 224 00:15:34,419 --> 00:15:35,349 Suze: fixed rate 225 00:15:36,140 --> 00:15:41,849 Suze: and your intention is that you want to hold I 226 00:15:41,859 --> 00:15:44,719 Suze: bonds for the long term and you want to take 227 00:15:44,729 --> 00:15:48,859 Suze: advantage of the 1.3% fixed rate 228 00:15:49,770 --> 00:15:51,909 Suze: and therefore I would do it, 229 00:15:52,950 --> 00:15:54,789 KT: Suze question number seven. 230 00:15:54,919 --> 00:15:56,890 Suze: KT. Did that make sense to you? 231 00:15:56,919 --> 00:16:00,710 KT: It did because wait, listen to question seven. If I 232 00:16:00,719 --> 00:16:05,299 KT: redeem my I bond I bought that has 0% fixed 233 00:16:05,309 --> 00:16:09,409 KT: rate and I buy a new one with the 1.3 234 00:16:09,419 --> 00:16:13,150 KT: fixed rate. Do you know about how long it will 235 00:16:13,159 --> 00:16:17,200 KT: take to make the three month interest penalty back? 236 00:16:17,869 --> 00:16:21,650 Suze: Assuming you have to be careful now when you redeem 237 00:16:22,169 --> 00:16:26,500 Suze: and you should only be redeeming when you have held 238 00:16:26,510 --> 00:16:31,789 Suze: your 0% bond long enough so that your renewal interest 239 00:16:31,799 --> 00:16:36,390 Suze: rate is in the 3.94% one which is what it 240 00:16:36,400 --> 00:16:40,719 Suze: is right now. And that's what you've been renewed at. 241 00:16:40,950 --> 00:16:46,109 Suze: And you have to hold that for three months. If 242 00:16:46,119 --> 00:16:50,729 Suze: you do that, then your penalty to redeem is only 243 00:16:50,739 --> 00:16:55,289 Suze: going to be 0.985%. 244 00:16:55,739 --> 00:17:02,440 Suze: If that's true. If you compare that penalty of 0.985% 245 00:17:02,750 --> 00:17:07,199 Suze: to the 1.3% that you're gonna pick up, it's gonna 246 00:17:07,209 --> 00:17:12,030 Suze: be about seven or eight months till you have recaptured 247 00:17:12,040 --> 00:17:15,399 Suze: that penalty. So, is that a good thing to do? 248 00:17:15,739 --> 00:17:18,399 Suze: It is? So you can't like, but you have to 249 00:17:18,410 --> 00:17:18,640 Suze: know 250 00:17:18,974 --> 00:17:23,314 Suze: what percentage of your penalty are you going to pay? 251 00:17:23,324 --> 00:17:26,255 KT: And you look at these things November 1st and May 252 00:17:26,265 --> 00:17:28,354 KT: 1st every year, every six months. 253 00:17:28,824 --> 00:17:34,264 Suze: But people KT didn't necessarily buy in May and November 254 00:17:34,545 --> 00:17:41,584 Suze: maybe they bought in December, January, February, March, April 255 00:17:42,510 --> 00:17:47,020 Suze: to get that other rate and now their six months 256 00:17:47,030 --> 00:17:50,959 Suze: from that time isn't up in May when the new 257 00:17:50,969 --> 00:17:56,000 Suze: one is. It's, you see, so very careful everybody. You 258 00:17:56,010 --> 00:18:01,530 Suze: wanna make sure that you're at the lowest possible interest rate, 259 00:18:01,540 --> 00:18:04,550 Suze: forget the fixed rate because it doesn't play in this. 260 00:18:04,640 --> 00:18:06,000 Suze: You wanna know 261 00:18:06,410 --> 00:18:11,359 Suze: that your variable rate is the lowest it could possibly be. 262 00:18:11,510 --> 00:18:14,599 Suze: And you have been getting that low rate for at 263 00:18:14,609 --> 00:18:19,829 Suze: least three months because if you haven't, they're gonna ding 264 00:18:19,839 --> 00:18:23,180 Suze: you for the three month interest penalty of the higher 265 00:18:23,189 --> 00:18:28,829 Suze: interest rate before it changed. Remember, it's the last three 266 00:18:28,839 --> 00:18:33,228 Suze: months of interest. So just because it's at a lower 267 00:18:33,239 --> 00:18:35,069 Suze: interest rate for you right now, 268 00:18:35,430 --> 00:18:39,329 Suze: doesn't mean that you've been getting that lower interest rate. 269 00:18:39,839 --> 00:18:42,329 Suze: So be careful, you want to have it, you know, 270 00:18:42,339 --> 00:18:45,489 Suze: for at least three months where you have been earning it. 271 00:18:45,619 --> 00:18:50,349 KT: So here's number eight, Suze, would you wait till next 272 00:18:50,359 --> 00:18:52,659 KT: year to purchase these new I bonds, 273 00:18:53,180 --> 00:18:57,069 KT: if at all, I have $10,000 to invest. 274 00:18:57,180 --> 00:19:00,979 Suze: Again, and I'm reiterating this, I'm sorry, KT, if I 275 00:19:00,989 --> 00:19:05,969 Suze: keep saying it because these questions, if you, if your 276 00:19:05,979 --> 00:19:09,930 Suze: intention is to have inflation protection, 277 00:19:10,520 --> 00:19:15,859 Suze: if your intention is to not really sell these, it's 278 00:19:15,869 --> 00:19:19,050 Suze: to keep them and have that as part of your 279 00:19:19,060 --> 00:19:23,699 Suze: fixed income portfolio. Why wait till next year, right? The 280 00:19:23,709 --> 00:19:29,140 Suze: important part really is that this is something that you 281 00:19:29,150 --> 00:19:33,229 Suze: want to invest in. Just that simple. Why wait, you 282 00:19:33,239 --> 00:19:35,780 Suze: might as well do it now the other thing you 283 00:19:35,790 --> 00:19:36,459 Suze: could do 284 00:19:36,859 --> 00:19:39,989 Suze: just if you want to see if all you have 285 00:19:40,000 --> 00:19:43,060 Suze: is $10,000 that you're ever gonna be able to invest 286 00:19:43,069 --> 00:19:47,239 Suze: in this. And you wanna see what happens with inflation 287 00:19:47,250 --> 00:19:50,979 Suze: next year, maybe. Where is the fixed interest rate going 288 00:19:50,989 --> 00:19:54,540 Suze: to be next year? Why not do 5000 this year 289 00:19:54,569 --> 00:19:58,040 Suze: and 5000 next year? Then either way you'll be fine 290 00:19:58,619 --> 00:20:02,079 Suze: but you have until the end of April to take 291 00:20:02,089 --> 00:20:06,780 Suze: advantage of the 1.3% fixed rate. All right, KT. 292 00:20:06,790 --> 00:20:08,560 KT: So number nine, 293 00:20:08,609 --> 00:20:09,900 Suze: Are we almost done? 294 00:20:09,979 --> 00:20:15,420 KT: Well, it gets a little more confusing. Number nine, if 295 00:20:15,430 --> 00:20:20,189 KT: I redeem and buy a new, I since taxes in 296 00:20:20,199 --> 00:20:23,439 KT: an Ibon are tax deferred like an IRA, 297 00:20:24,189 --> 00:20:28,659 KT: Suze. Will I owe income tax on my interest or 298 00:20:28,670 --> 00:20:31,359 KT: is it like an Ira rollover? 299 00:20:32,270 --> 00:20:34,939 Suze: So many people have asked me that question. 300 00:20:34,989 --> 00:20:36,699 KT: I, I don't know how to answer that. 301 00:20:37,160 --> 00:20:41,270 Suze: Of course not. No, it is not like an IRA 302 00:20:41,280 --> 00:20:46,569 Suze: rollover when you redeem a Series I bond or any part 303 00:20:46,579 --> 00:20:48,300 Suze: of a Series I bond. 304 00:20:48,790 --> 00:20:53,219 Suze: And you haven't been paying the taxes on the interest annually, 305 00:20:53,229 --> 00:20:59,109 Suze: which most of you have not. The interest is tax deferred. 306 00:20:59,339 --> 00:21:01,429 Suze: When you go to redeem it, 307 00:21:01,829 --> 00:21:06,419 Suze: you are going to pay a three month interest penalty 308 00:21:06,430 --> 00:21:11,140 Suze: if you're redeeming it within year two and five and 309 00:21:11,150 --> 00:21:15,199 Suze: you will pay ordinary income taxes on it no matter 310 00:21:15,209 --> 00:21:17,429 Suze: when you redeem it. 311 00:21:17,449 --> 00:21:21,709 KT: Ready for this one. This is about the clocks again, Suze. 312 00:21:21,719 --> 00:21:25,089 KT: If I redeem my I bond and buy a new one, 313 00:21:25,209 --> 00:21:28,900 KT: does the time clock start all over again? And if 314 00:21:28,910 --> 00:21:30,579 KT: it does, is it worth it? 315 00:21:31,380 --> 00:21:37,579 Suze: The time clock? remember when you buy an I bond , 316 00:21:38,089 --> 00:21:42,438 Suze: you cannot touch it in year one, the 1st 12 months, 317 00:21:42,449 --> 00:21:43,420 Suze: no matter what 318 00:21:44,109 --> 00:21:52,729 Suze: years, 2, 3, 4 and five, there is a three month interest penalty. 319 00:21:53,030 --> 00:21:58,290 Suze: After five years, you can redeem any amount of money 320 00:21:58,300 --> 00:22:02,889 Suze: from your I bond with no penalty whatsoever. However, 321 00:22:03,599 --> 00:22:09,660 Suze: if you redeem an I bond now and you take that 322 00:22:09,670 --> 00:22:14,280 Suze: money and buy a new one with it. Absolutely. The 323 00:22:14,290 --> 00:22:18,699 Suze: time clock starts all over again. So if you're in 324 00:22:18,709 --> 00:22:24,099 Suze: the third year or the fourth year of your I bond already, 325 00:22:24,109 --> 00:22:26,430 Suze: because I've been telling you to buy I bonds for 326 00:22:26,439 --> 00:22:28,060 Suze: a long time. 327 00:22:28,760 --> 00:22:31,400 Suze: I haven't recently told you to buy them, but for 328 00:22:31,410 --> 00:22:35,619 Suze: a long time, a while ago, you have to judge, 329 00:22:35,630 --> 00:22:39,969 Suze: is it worth it to start the time clock all 330 00:22:39,979 --> 00:22:44,760 Suze: over again? Because you are possibly one or two years 331 00:22:44,770 --> 00:22:50,099 Suze: away from there not being any penalty whatsoever to take 332 00:22:50,109 --> 00:22:50,839 Suze: out 333 00:22:50,979 --> 00:22:54,569 Suze: that money once you hit five years. 334 00:22:54,579 --> 00:22:57,819 KT: So you have, so the first year you can't touch it, 335 00:22:57,829 --> 00:23:00,969 KT: you're two through five, you can touch it and you 336 00:23:00,979 --> 00:23:04,409 KT: get a three month penalty after year five, you're scot 337 00:23:04,439 --> 00:23:05,300 KT: free baby. 338 00:23:05,369 --> 00:23:07,280 Suze: So you have to decide, is it worth it? Or 339 00:23:07,290 --> 00:23:13,079 Suze: not because let's just say interest rates skyrocket on us 340 00:23:13,729 --> 00:23:16,819 Suze: and maybe inflation doesn't necessarily. 341 00:23:17,489 --> 00:23:21,218 Suze: And now you want to take advantage of, you know what? 342 00:23:21,229 --> 00:23:24,630 Suze: I don't want the I bond anymore. I wanna lock in 343 00:23:24,819 --> 00:23:28,310 Suze: a 10 year treasury note or a two year certificate 344 00:23:28,319 --> 00:23:31,869 Suze: of deposit or whatever it may be. Do you want 345 00:23:31,880 --> 00:23:34,260 Suze: to be in a situation where you can get at 346 00:23:34,270 --> 00:23:37,670 Suze: your money without any penalty? Probably. 347 00:23:38,339 --> 00:23:41,349 KT: Ok, we're almost to the end of these questions 348 00:23:41,890 --> 00:23:44,420 KT: and I hope this is helping everyone. I'm still a 349 00:23:44,430 --> 00:23:47,280 KT: little confused, but I have much more clarity as to 350 00:23:47,290 --> 00:23:48,790 KT: what to do and what not to do. 351 00:23:48,800 --> 00:23:49,319 KT: Who does? 352 00:23:49,329 --> 00:23:49,880 KT: I do, 353 00:23:50,479 --> 00:23:50,969 KT: KT. 354 00:23:50,979 --> 00:23:53,989 Suze: How much o you wanna bet me if I go back and 355 00:23:54,000 --> 00:23:54,869 Suze: ask you all, 356 00:23:55,479 --> 00:23:58,910 KT: Just ask me anything right now, ask me any question. 357 00:23:59,030 --> 00:24:01,270 KT: So number 11, 358 00:24:01,280 --> 00:24:04,819 Suze: But trust me when this podcast is over, I am 359 00:24:04,829 --> 00:24:05,739 Suze: going to grill her. 360 00:24:05,750 --> 00:24:09,349 KT: She does. All right. Number 11, I'm going to redeem 361 00:24:09,359 --> 00:24:11,989 KT: my I bond to buy a new one. I was 362 00:24:12,000 --> 00:24:16,310 KT: told I should only redeem on the second of the 363 00:24:16,319 --> 00:24:16,899 KT: month 364 00:24:17,239 --> 00:24:19,479 KT: and wait to buy the new one till the end 365 00:24:19,489 --> 00:24:20,609 KT: of the month. Why? 366 00:24:21,189 --> 00:24:23,739 Suze: Now this is a tricky one. You have to know 367 00:24:23,949 --> 00:24:29,420 Suze: that whenever you redeem an I bond in a month, you 368 00:24:29,430 --> 00:24:33,300 Suze: don't get interest. So if the I bond was sitting there 369 00:24:33,310 --> 00:24:35,979 Suze: all the way to the 25th and you decided to 370 00:24:35,989 --> 00:24:38,869 Suze: redeem it, you wouldn't have made any interest for all 371 00:24:38,880 --> 00:24:42,750 Suze: those 25 days. So you have to know because your 372 00:24:42,760 --> 00:24:43,339 Suze: interest 373 00:24:43,435 --> 00:24:47,055 Suze: is credited on the very first of the month. You 374 00:24:47,064 --> 00:24:49,915 Suze: want to make sure that you get that interest. So 375 00:24:49,925 --> 00:24:53,204 Suze: I personally would wait till the second of the month, 376 00:24:53,214 --> 00:24:57,505 Suze: whatever month you're redeeming to redeem and take out the 377 00:24:57,515 --> 00:24:58,694 Suze: money I want. 378 00:24:59,540 --> 00:25:03,379 Suze: In terms of purchasing an I bond, you would want to 379 00:25:03,390 --> 00:25:07,099 Suze: wait till almost the end of the month because what's 380 00:25:07,109 --> 00:25:10,689 Suze: so strange if you bought it on, let's say the 25th, 381 00:25:11,089 --> 00:25:14,560 Suze: you would be credited as if you had purchased it 382 00:25:14,619 --> 00:25:18,000 Suze: on the very first of the month. So you get 383 00:25:18,010 --> 00:25:21,449 Suze: a whole month free of interest, so to speak. 384 00:25:21,660 --> 00:25:25,790 Suze: So you redeem on the second of the month, you 385 00:25:25,800 --> 00:25:30,520 Suze: purchase an I bond towards the very end of the month. 386 00:25:30,569 --> 00:25:32,159 KT: So sell in the beginning and by at the end. 387 00:25:32,989 --> 00:25:36,040 Suze: So for those of you who are redeeming your I 388 00:25:36,050 --> 00:25:41,979 Suze: bonds to take advantage of the 1.3% fixed rate, redeem 389 00:25:41,989 --> 00:25:45,239 Suze: them on about the second of the month 390 00:25:45,920 --> 00:25:48,420 Suze: and then put the money in a money market fund 391 00:25:48,430 --> 00:25:53,719 Suze: for like, you know, 20 days, earn interest there. And 392 00:25:53,729 --> 00:25:56,530 Suze: then what you can do is take the money and 393 00:25:56,540 --> 00:26:00,640 Suze: buy your series I bond for the 1.3 fixed rate 394 00:26:00,939 --> 00:26:04,619 Suze: at like the 26th or 27th. Unless it's the month 395 00:26:04,630 --> 00:26:06,300 Suze: of February, then do it earlier 396 00:26:06,569 --> 00:26:10,949 Suze: and then you'll be credited interest from the very beginning 397 00:26:10,959 --> 00:26:13,390 Suze: of that month. That's what you should do. 398 00:26:13,400 --> 00:26:16,050 KT: OK. So here's what I need you to do to 399 00:26:16,060 --> 00:26:17,589 KT: wrap this up for everyone. 400 00:26:18,459 --> 00:26:23,010 KT: All these questions, you know that everyone goes to Treasury Direct, 401 00:26:23,020 --> 00:26:25,410 KT: which is a little bit difficult to, to kind of 402 00:26:25,420 --> 00:26:30,079 KT: navigate and figure out where can everyone go to get 403 00:26:30,089 --> 00:26:34,150 KT: the answers again? Or the clarity from all these questions 404 00:26:34,160 --> 00:26:35,129 KT: we just reviewed? 405 00:26:35,430 --> 00:26:35,780 Suze: Yeah. 406 00:26:35,849 --> 00:26:39,479 KT: How can they, how can they get a simple direct answer? 407 00:26:39,489 --> 00:26:41,819 Suze: And one that's always there for you because the last 408 00:26:41,829 --> 00:26:44,819 Suze: thing I want to be doing, everybody is spending every 409 00:26:44,829 --> 00:26:48,839 Suze: podcast on how I bonds work. But there are people 410 00:26:48,849 --> 00:26:51,899 Suze: out there that devote their entire, 411 00:26:52,260 --> 00:26:55,449 Suze: you know, channel that they tell you everything on whether 412 00:26:55,459 --> 00:27:00,250 Suze: it's youtube or blogs or whatever. That's all about I bonds. 413 00:27:00,640 --> 00:27:02,260 KT: Do you have a favorite. 414 00:27:02,489 --> 00:27:04,160 Suze: I, I think I do actually. 415 00:27:04,239 --> 00:27:04,819 KT: What is it? 416 00:27:04,829 --> 00:27:07,609 Suze: I'll get there in one second. The reason that it's so 417 00:27:07,619 --> 00:27:12,119 Suze: complicated KT when you go to Treasury Direct 418 00:27:12,449 --> 00:27:16,000 Suze: is when you look up the value of your I bonds, 419 00:27:16,239 --> 00:27:20,780 Suze: they always subtract three months of interest as if you 420 00:27:20,790 --> 00:27:24,469 Suze: had already gotten the three month interest penalty. So you 421 00:27:24,479 --> 00:27:26,849 Suze: don't really know the amount of money that you have 422 00:27:26,859 --> 00:27:27,389 Suze: in there. 423 00:27:28,020 --> 00:27:31,979 Suze: Now, one of my absolute favorite sites and I've learned 424 00:27:31,989 --> 00:27:35,760 Suze: a lot from this gentleman. He has no idea I 425 00:27:35,770 --> 00:27:39,719 Suze: read him, but I do all the time. His name 426 00:27:39,729 --> 00:27:44,900 Suze: is David Enna and he has a website or a 427 00:27:44,910 --> 00:27:51,040 Suze: blog that's on tips watch dot com. That's T IP S 428 00:27:51,280 --> 00:27:54,589 Suze: watch dot com. 429 00:27:55,040 --> 00:27:59,699 Suze: And it was his columns, KT, that I would read 430 00:27:59,709 --> 00:28:02,469 Suze: most of the time or all the time where I 431 00:28:02,479 --> 00:28:04,739 Suze: learned about a website 432 00:28:05,510 --> 00:28:07,890 Suze: that was created by a man by the name of 433 00:28:07,900 --> 00:28:09,239 Suze: Bob Hinckley. 434 00:28:09,890 --> 00:28:17,069 Suze: That's Eyebonds...E-Y-E-Bonds dot info 435 00:28:18,459 --> 00:28:22,609 Suze: that if you go there, everybody and you push the 436 00:28:22,619 --> 00:28:26,760 Suze: little square that says I bonds and then you look 437 00:28:26,770 --> 00:28:29,000 Suze: at the bottom of what comes up and you put 438 00:28:29,010 --> 00:28:30,930 Suze: the amount that you invested 439 00:28:31,579 --> 00:28:33,839 Suze: and you go to the left hand side and just 440 00:28:33,849 --> 00:28:37,869 Suze: put the month that and year that you bought it, 441 00:28:38,060 --> 00:28:40,599 Suze: it will tell you exactly how much you have in there. 442 00:28:40,609 --> 00:28:45,430 Suze: Exactly how much you have earned every single time. I 443 00:28:45,439 --> 00:28:53,160 Suze: think it's fabulous. I bonds. E-y-e-b-o-n-d-s dot Info. 444 00:28:53,390 --> 00:28:58,770 Suze: And again, it's tips watch dot com. He has a 445 00:28:58,780 --> 00:29:02,760 Suze: frequently asked questions, he tells you everything and a lot 446 00:29:02,770 --> 00:29:05,890 Suze: of you need to read this a lot of times 447 00:29:05,900 --> 00:29:09,839 Suze: when it's a video or even a podcast or whatever, 448 00:29:10,099 --> 00:29:13,589 Suze: it can get confusing when it's something that you can 449 00:29:13,599 --> 00:29:16,609 Suze: print out and it's written for you and it was 450 00:29:16,619 --> 00:29:18,560 Suze: written as a blog. 451 00:29:19,250 --> 00:29:24,250 Suze: It's really far easier to understand. So, KT, really, that's 452 00:29:24,260 --> 00:29:25,849 Suze: where everybody should go. 453 00:29:25,859 --> 00:29:28,260 KT: I hope this clarifies... do you want to test me? 454 00:29:30,390 --> 00:29:33,099 KT: Wanna give me a test? Just give me a test. 455 00:29:34,400 --> 00:29:37,020 Suze: I have an I bond that's paying 456 00:29:38,839 --> 00:29:45,449 Suze: 6% that I bought 6.38%. Alright. And it's at a 0% 457 00:29:45,589 --> 00:29:46,619 Suze: interest rate 458 00:29:47,869 --> 00:29:50,900 Suze: and I bought it maybe a year or so ago. 459 00:29:51,310 --> 00:29:53,550 Suze: Should I redeem it for the new ones? 460 00:29:53,869 --> 00:29:54,160 KT: No. 461 00:29:54,170 --> 00:29:54,969 Suze: Why? 462 00:29:55,800 --> 00:30:00,260 KT: I would hold in? Because you bought it about a year... (wrong answer noise) 463 00:30:02,680 --> 00:30:06,859 Suze: All right, everybody. So until Sunday school, which will be 464 00:30:06,869 --> 00:30:11,880 Suze: Suze School. Ok. It's just that easier. Why do we 465 00:30:11,890 --> 00:30:15,599 Suze: want everybody to know Miss Travis? 466 00:30:15,609 --> 00:30:19,790 KT: Wherever I go, I'll create a more peaceful, joyful, loving 467 00:30:19,800 --> 00:30:23,020 KT: world and learn everything I need to know about eye bombs. 468 00:30:23,030 --> 00:30:28,319 KT: And if you do that you will be unstoppable.