This is just a quick note to say that the September inflation numbers are out, so we can now calculate the new Series I Savings Bond rates that will go into effect in November.
As I’ve noted in the past, the Series I Savings Bond rate is composed of a fixed and a variable portion. Based on recent inflation data, it looks like the variable portion of the rate will be 0.74%. The fixed rate currently stands at 0.2%, so if that stays them same, then I Bonds will pay 0.94% starting in November.
If you buy before November, you will get the current rate of 1.74% for six months, then the new (November) rate for the following six months. We’re actually maxed out on I Bonds for the year, so we can’t buy any more until January.
5 Responses to “Series I Savings Bond Rates – November 2010”
I wanted to warn potential buyers that you must make a purchase before the last BUSINESS DAY of the month to get the old rate. I tried to purchase under the old rate on Saturday (Oct. 30th) and was told by the computer that my purchase would be moved to next business day (Nov. 1) so I cancelled. I’ll know better next time around.
It almost be better if you put the money under the mattress then to invest in T-bills
Hasn’t the Fed realized by now that keeping interest rates down isn’t, nor has it worked as presumed. That’s rhetorical. ;-D
I’ve been hoping every six months that there will be enough of a change to make it worth investing in I bonds, but know it won’t happen until the Fed tries another approach regarding inflation.
Nickel, I truly appreciate you providing a different angle on why you invest in the I bonds; I honestly hadn’t thought of this. Thanks!
Here is my main summary: link
They provide us with a degree of inflation protection, the income is tax deferred, and if we use it to pay for qualified college tuition expenses, the earnings are tax free. Details on tax treatment related to education: link
If fixed rates move up appreciably, we can always break the bond (12 month minimum). Between 1-5 years, there is a 3 month interest penalty, after 5 years there is no penalty. In other words, we’re not really tied down for the long term.
Hope this helps.
Oh, one other thing… Since annual purchases are capped, we can’t simply wait for higher fixed rates and plow our money in all at once. If we want a large(ish) stake in I Bonds, then it has to be built up gradually.
Keep in mind that I Bonds are just one piece of our investment puzzle.
Can you provide more insight into why you invest so heavily in i bonds? I understand that inflation will increase, which will accordingly increase the variable interest rate component of the i bond. But by locking in the 0.2% fixed rate, what is the long-term benefit of buying i bonds now?