June 30, 2022, 03:15 PM
ZSMICHAELRecent update from WSJ>
If Inflation Hasn’t Made You Crazy, Try Buying an I Bond
This spring, Caren Bordowitz of Macomb, Ill., sacrificed vacation time, hauling herself to a bank almost halfway across the state.
Her mission? To buy a U.S. savings bond.
With the stock market sinking and inflation raging, a once-obscure government bond is suddenly one of the hottest investments in the country. Nicknamed “I bonds,” these instruments are backed by the U.S. government and protected against inflation. They are virtually risk-free, yet currently pay 9.62% annually.
Some investors are so desperate to buy I bonds that they will put up with a weeks-long bureaucratic rigmarole that one likened to a “Bataan Death March.”
To buy the bonds in electronic form, investors must visit the government’s TreasuryDirect.gov website. There they can enter their bank information and buy a maximum $10,000 annually per account. Most are able to do so in minutes, without a hitch.
But some customers—the Treasury says it doesn’t know how many—aren’t instantly approved. If the information those people enter doesn’t match the data that the Treasury’s verification service has on file, they must verify their identity by getting their signature certified on a document known as Form 5444. The Treasury says banks and brokerage employees, among others, may do that. Then the customer has to submit the form by snail mail.
A Treasury spokesman said that these measures are intended to protect against fraud.
When Ms. Bordowitz, 61, took Form 5444 to her local bank in late April, a manager she’d known for years said she couldn’t certify her identity. Instead, Ms. Bordowitz says she was told she’d have to get a special seal known as a medallion stamp, which authenticates signatures when securities are transferred.
That required driving an hour and 45 minutes each way to another branch in Springfield, Ill. Ms. Bordowitz took the afternoon off from her graphic design job to get the stamp. She mailed the form and was finally able to access her account a month later.
“I felt like it was ‘Legend of Zelda,’ ” she said, referring to a videogame, “where you have to go to one place to get an ingredient like, let’s say, a mushroom, and you have to take that to the witch, and the witch makes a potion, and you have to take the potion to the wizard…and the person gives you a medallion.”
Caren Bordowitz of Macomb, Ill., sacrificed vacation time to certify her identity and buy a U.S. savings bond.
PHOTO: CAREN BORDOWITZ
Besides a medallion stamp, banks can also use similar procedures including something called a signature guarantee. But some banks are declining to certify the forms out of concerns about liability.
A Treasury spokesman said the agency may soon permit any notary public to certify individuals’ identities.
Through mid-June, the government sold $14.4 billion in I bonds—roughly 40 times as much as in all of 2020, Treasury data show.
More than 1.5 million accounts have been opened since November, according to the agency. Less than a million existed prior.
Some people have gone to great lengths to buy the bonds, to no avail.
Katie Loewen, a 34-year-old stay-at-home mother of four young children in Aurora, Colo., said about a dozen bank branches and her brokerage firm all shot her down when she asked them to certify Form 5444 for her and her husband.
Ms. Loewen even called the local courthouse—TreasuryDirect.gov says a judge can certify the form—but “they had no idea what I was talking about,” she said.
Months later, Ms. Loewen is still trying to find somebody, anybody, to certify the signatures. On the $20,000 the couple would like to invest in I bonds, the delay is costing them almost $40 every week in forgone interest. Ms. Loewen, who used to work as a tax accountant, said she is “passionately frustrated.”
Eric Wuestewald, 34, couldn’t get his form signed because he uses an internet bank that lacks brick-and-mortar locations.
Mr. Wuestewald, a government contractor, got turned down by several other banks in the Washington, D.C., area. This spring, he waited at least a half hour at a crowded bank before being taken into a back room. A banker looked at the form and told him, “I’m sorry, I can’t give you that stamp,” Mr. Wuestewald recalled.
“I probably lost my cool a little bit,” he said, before a bank manager finally agreed to certify his signature. But he still bemoans using the TreasuryDirect website, which got its last significant update in 2002.
The virtual keyboard to enter a password on the US Treasury website.
“I’m half expecting the hamster-dance page to pop up,” said Mr. Wuestewald, referring to the viral 1990s web cartoon.
Account holders must use a mouse or trackpad to enter their password on a ghostly gray online keyboard with no lower-case letters. Treasury officials say they are working on updating the website, which will take at least six to nine months.
Calls to TreasuryDirect’s customer-service line are up 125% over last year, the agency said. With only about 40 full-time staff fielding more than 20,000 calls a week, wait times have regularly topped two hours. A spokesman said the agency has hired temporary workers to assist with the deluge of calls and hopes to double the staff for the next year or so.
Murray Berkowitz, 77, a retired advertising executive in West Palm Beach, Fla., likened trying to activate TreasuryDirect accounts for himself and his wife to “the Bataan Death March.”
When he learned he’d need to submit the dreaded Form 5444, Mr. Berkowitz called TreasuryDirect’s customer service, but hung up after waiting on hold for an hour and 36 minutes.
“Cruel and unusual punishment by any standard,” he said.
Murray Berkowitz perusing the TreasuryDirect website.
PHOTO: RIVA BERKOWITZ
He went to two banks and a brokerage office, and no one would certify the form.
After Mr. Berkowitz repeatedly called and emailed TreasuryDirect, a Treasury employee phoned him, he said. She then called his bank for him, unlocking his accounts.
After all that, he dreads logging in to the website.
“I’m so afraid of pushing one wrong key,” he said, “that I make my wife log on for both of us so she won’t blame me if I make a mistake.”
Louise Andrews, a retiree in Williamsburg, Va., had to change the email address associated with her TreasuryDirect account after her old email got hacked. But the government’s website wouldn’t let her enter a new email address, because her old one was invalid.
So she had to call the toll-free number.
On one attempt, “the recording estimated an hour-and-a-half wait when I started,” said Ms. Andrews. More than an hour later, the estimated wait had risen to 2½ hours, at which point “the battery in my cordless phone went dead.”
After trying intermittently since April, in early June she braved two hours and 13 minutes on hold until a “very helpful” customer-service representative picked up and restored her access in a few moments.
Ms. Andrews promptly bought $10,000 in I bonds for herself and $10,000 for her husband, saying she is pleased she lived “long enough to get this done.”
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December 28, 2022, 02:53 PM
RogueJSKquote:
Originally posted by r0gue:
What are they paying nowadays?
6.89% overall, with 0.4% being fixed and 6.49% being variable.
As stated by ZSMICHAEL, this new rate as of November 1st is less in the short term compared to the prior 9.62% (all variable with 0% fixed) rate from the May-October 2022 period, but if you hold them for 4+ years you'll actually earn more in the long run compared to bonds purchased in the prior rate period, thanks to the new fixed rate.
quote:
Is there an advantage to doing so prior to the new year?
You can buy up to $10k in I Bonds each calendar year. So you could buy $10k now and $10k next week, and be holding $20k total for all of next year, versus buying none now and only being able to hold $10k total next year.
But understand that it can take a couple days for your I Bond order to be processed. And occasionally there's identify verification issues that crop up when creating a new TresuryDirect account, which require you to obtain signatures from your bank on a paper form and send it in to the Treasury Department, which can take a week or more to process. So if you sign up to try to buy $10k today, there's a chance that it won't be able to be processed until after the first of the year.
