Buying I bonds
What do you think of I bonds, paying 3.54% with inflation rising?
Terry Says
Don’t do this! The FIXED FLOOR rate for i-bonds is currently ZERO! The other portion of the rate is set semi-annually an d is currently 1.77%. Only by projecting a similar yield for the next six months starting Nov 1 would you be getting the overall 3.54%.
Here’s how the 6-month adjustment is set:
We set the inflation rate every six months (on the first business day of May and on the first business day of November), based on changes in the non-seasonally adjusted Consumer Price Index for all Urban Consumers (CPI-U) for all items, including food and energy.
I bonds were a great deal in the olden days when there was a higher floor rate, even though the semi-annual adjustment was low based on inflation. I don’t think they are a good deal right now — even though inflation is rising. I think the adjustments will lag other comparable securities when rates start to rise.
Learn more about I bonds at this link to the page on TreasuryDirect.gov.
