I Bonds — still not a good deal?
Hi Terry, I'm confused by your recent answer to the question whether I Bonds are good inflation protection. You said to avoid them because there was a change to the interest calculation. What changed? I can find no reference to any changes other than the usual twice-yearly setting of fixed and variable rate components. Thanks.
Terry Says
Good catch, and my error. I meant to say that Series EE bonds are no longer attractive because they carry a fixed (low) rate for the life of the bond. ( They used to be adjustable.) As for I bonds, I haven't recommended them in a long time, because half of their interest is paid over the life of the bond at a fixed rate -- and until recently, that fixed rate was way too low. I hadn't double-checked that base rate for a while, and I did so before this response, and was pleasantly surprised! Currently, Series I bonds purchased through April, 2018 carry a fixed rate of 2.58% (with additional interest re-computed every six months). I would wait until May to see if that base rate for the life of the bond is adjusted upward. It's hard to imagine it declining, given current inflation reports.
