As close to a free lunch as exists in personal finance.
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So are buying these 7% bonds really as easy as opening an account with Treasury Direct and making a bank transfer to purchase?
The Bogleheads have been all over this for as long as they’ve been around. One of the things they do right.
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Should I do this as a young-ish person with all their money in an index fund?
It’s not really a substitute for stonks, but if you have a few k in a savings account that you don’t need for at least 6 months, this is a good option. Think of it as a short term CD.
It may not make sense to get this depending on your financial plan. For example when I was young, my plan was 100% stonks and 6 month emergency fund in cash.
With that plan (which is a very reasonable plan for someone in their 20s or 30s, imo), there is no real place for I-bonds.
Of course you could alter your plan to hold a little extra cash for a year and then once your i-bonds become redeemable, then you revert to the prior plan. But it’s not clear that it’s worth the hassle for $350 (or maybe a bit more than that).
Yes, but if you look through this thread, you will see that some people were able to set up a treasurydirect account easily, completely online and within minutes, while others had to jump through some incredibly weird hoops to just set up and fund the account. I have no idea what the reason for this variance was, but for most it’s really very simple to set up.
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It took me 5 minutes. If i had hit any snags I would have bailed.
Uh yeah I’ll be that guy I don’t really give a shit / am excited about locking up a $700 gain on a 10k buy for a year kinda surprised you all are all 
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True. One of their pet strategies is to request part of their tax refund in i-bond form (which is apparently a thing you can do) in order to get over the 10K per person per year limit.
Do Boogleheads generally have big returns? I would have guessed the opposite
Yeah that’s me, thanks
People are only really doing this with funds that are sitting in cash (or similar) that they were extremely unlikely to spend in the next year, anyway.
That cash was very likely going to be locked up anyway, so the fact that it is locked up for a year, is nearly irrelevant. If it is relevant, then this isn’t for you.
Oh, and you’re not locking $700. If we’re talking about exactly one year, then it’s almost certainly less than that. And if you consider opportunity cost, it is less still.
Define big.
They generally get market returns and getting market returns beats nearly all other strategies. So relative to most of the dumb shit people do, their returns are big.
But their returns are tiny compared to someone who went all in on bitcoin or Tesla.
IDK I guess my point is that my credit union has a dividend thingy on my emergency fund that results in about a $500/yr guarantee but if the worst happened its not locked up and I could pull that $ out, unlike the i-bonds. Who knows, ignore me.
If you’re getting $500/yr off of 10K already, then yeah, I wouldn’t bother with i-bonds either.
I get about $500 a year dividend from keeping my emergency fund of about $30k in my local credit union, if thats um crazy or something move to Minnesota. We have punch and pie.
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1.7% is not bad. But I’d put 10K of that in i-bonds if (and only if) the temporary loss of liquidity was not a problem.
While punch and pie is nice, it’s very likely your credit union would accept out of state customers. There are people who bonus whore these rate deals the way the bros in the sports betting thread are bonus whoring at new sportsbooks. I was recently reading about some dude who has accounts at like 5 credit unions across the country to take advantage of high-interest accounts that are capped (e.g. they will give you 5% per year but only on the first 3K, and then the rate plummets to sub 0.5% for all money above that) .
Meant tax refund not market stuff. I wouldn’t have guessed they would be getting large refunds
i think they increase their withholdings specifically for that reason