Are I-Bonds worth buying with a floor rate of 0%

I have never purchased I-Bonds before and have noticed that a lot of you prefer these over laddering CD's.  The question I have is are they still a good deal with the floor rate being 0%?  Would you wait for the floor rate to increase first?

Also, how do you track these in YNAB?  Do you track them as one account for each individual bond or do you combine the bonds into one account?  I can see individual bonds as getting difficult to track since you may end up with a significant number.

Do you track them as on or off budget?

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  • I track them as one account. Treasury Direct will provide you with an aggregate number. I keep the account on budget. You just have to realize that there is

    The composite rate is based on inflation, whereas bank rates are not. It's up to you if you want to buy with a 0% fixed rate component. If you had asked me in April, I would have said no, but now I'm thinking otherwise.

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    • nolesrule I like the idea of one account, simplifies things greatly.  Are you reconsidering that 0% may be a good deal because of inflation increasing?  If so that may be a good idea as the Feds will probably keep interest rates low with the amount of debt the US is accumulating.

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      • nolesrule
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      • nolesrule
      • 1 mth ago
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      ynaber2613 I think inflation will probably beat interest rates here in the U.S. for the forseeable future.

      The nice thing about the inflation adjusting is that you don't have to hunt for rates everytime CDs renew. It just is.

      The other benefits are tax deferral and no state taxes. So ideally you want to be within 30 years of retirement so that when you cash them in you're likely to be in a lower tax bracket than you are now.

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    • nolesrule Actually in retirement now, so not sure if it is too late to take advantage or not.

      Disregard, I just looked at their site and may still be worth it.  Can't redeem for first year and give up 3 months interest in years 1-5, and no penalty after 5 years.

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      • ynaber2613
      • ynaber2613
      • 1 mth ago
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      nolesrule Another question, I just read this on their site :

      "You can cash a minimum of $25 or any amount above that in 1-cent increments. If you cash only a portion of the bond’s value, you must leave at least $25 in the TreasuryDirect account.  Redemptions are comprised of principal and interest. (In a partial redemption, we pay interest only on the partial amount you cash.)"

      So I assume you do not need to buy multiple small bonds to avoid having to redeem so much at one time since you can redeem a partial bond.  Also, can you redeem a partial bond multiple times, basically treat it like a savings account?

      If the above premise is correct then why would someone not redeem a 0% base bond when interest rates go up and then purchase a bond with a higher base?

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