Your April 2022 I bonds purchase will turn your $100 into $103.56 just 6 months later. To calculate the annualized rate and to compare it to other rates just double the 6-month inflation rate. Most interest rates are quoted in annual terms, but the I bonds are quoted in semi-annual 6-month terms. When the US Government announces the 6-month inflation rate, you’ll be earning double that amount for half the year. Now, for purchases and renewals from May 2022 – October 2022 the rate is 9.62%! Then, in November 2021 I bond rates doubled to 7.12%! NY Times: With inflation rising, consider the humdrum US Savings Bond WSJ: I Bonds – the safe high return trade hiding in plain sight & Investors Flock to ‘I Savings Bonds’ for Protection Against Inflation
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Many investors we talk to hadn’t heard of US Series I Savings Bonds (I Bonds) but have recently become aware of them because of the eye-popping yields they started offering in 2021.Ĭoverage began in earnest in May 2021 when the 6-month ‘inflation rate’ of 1.77% was announced (which is 3.54% annualized!). I bonds are a great place for part of your emergency fund moneyīonus: Listen to our podcast with savings bond expert David Enna from on I bonds: US Series I Savings Bonds Simplifiedįree Video Course: Your 5 Step Retirement Income Plan.You can only buy $10,000 per person, per year, and you have to do it at.If you cash out between the end of year one and the end of year five, you lose your prior three months interest as a penalty.You have to hold them for 12 months minimum.Now, what are the details with an I bond? In a world of inflation worries and few inflation-adjusted investments, the I bond is a great place to look for savers.
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Government Savings bond that carries a fixed interest rate, plus an additional inflation adjuster, so that you get an inflation-adjusted real rate of return. It does not seem worth waiting until May just to see if the fixed rate is any higherĪn I bond is a U.S.There is always a possibility the Treasury increases the ‘fixed rate’ from 0.0% to a higher number, but many observers believe the possibility is extremely low.You will likely want to buy bonds before April 28 to get both the current 7.12% rate, and the next renewal rate of 9.62%.If you are someone who bought bonds already 2021 and you were hoping to get more I bonds but hit the annual limit:.What to consider when buying I bonds in 2022 The rate after that, from November 2022 – April 2023 purchases and renewals, will be determined later.The next rate, on May – October purchases and 6-month renewals, will be 9.62%.We know the current rate (7.12% if bought before April 28, 2022).There are 3 rates you need to keep in mind: When we compare the 6-month composite rates against 12-month treasuries at the time we see that the 6-month I bond rate is an average of 0.31% lower.Īt a combined 12-month rate of 8.54%, buying an I bond in April gets 6.7% more compared to the 1.81% 12-month treasury rate (). * Based on April rate of 7.12% and 6-month renewal rate of 9.62%Īt 7.12% for April purchases, and a 6-month renewal rate of 9.62%, we believe this is one of the best 12-month rate I bonds have ever offered! * Extrapolated 12 month (for April purchases):Ĭurrent CPI-U numbers with implied inflation rates for May – November 2022 I Bond purchase and renewals We are also keeping a close eye on the latest CPI-U numbers, which you will see below determine the inflation rates for I bonds.
(but only on existing I bonds, or purchases made by April 28)
This combined rate comes to 8.54% over the next 12 months! What’s even more important is that the May 2022 I bond inflation rate is going to be 9.62% (based on CPI data released April 12). Your $100 investment becomes $103.56 in just 6 months! The April 2022 I bond inflation rate is 7.12% ( US Treasury) which is 3.56% earned over 6 months.
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