Next I bond inflation component will be 4.83% (Composite if purchased in April: 6.06%)

[swag]

Some info about a not-too-terrible way for small savers to guard against inflation (I've been buying these things for years, and the ones that I bought 10 years ago managed to beat the stock and bond index funds I bought at the same time). Usual caveat: know what you're buying before you invest anything.

http://www.savings-bond-advisor.com/savings-bond-alert-032/

The next I bond inflation component will be 4.83%, up from the current 3.06%. The component is based on the difference between the Consumer Price Index in September (208.490) and March (213.528). The March CPI was released this morning.

To determine what your own I bonds will earn during their next six-month rate period, you have to add their fixed base-rate to the 4.83% inflation rate. The fixed-base rate for your I bonds can be anywhere between 1.0% and 3.6%, depending on when the I bond was issued.

Moreover, keep in mind that the new interest rate for your I bonds will not necessarily begin on May 1. Instead, new rate periods begin every six months starting with the month in which your I bond was issued. So, for example, an I bond issued in July begins new rate periods in July and January.

Because the Treasury doesn't have public criteria for setting the fixed base-rate for new I bonds, it's impossible to predict what the next I bond fixed-base rate will be. However, the Treasury appears to set the fixed base-rate for new I bonds about 1 percentage point lower than the rate on 10-year Treasury Inflation Protected Securities (TIPS). Yesterday, that rate was 1.28%, indicating that the new rate is likely to be 0.5% or less.

Given that the current fixed base rate is 1.20%, it would much better to invest in I bonds this month rather than to wait until May 1 or later. I bonds you purchase today will earn a composite rate of 4.28% for six months, followed by six month of 6.06%. These are much higher rates than are available even in other US Treasury securities.

. . . more at the above link

[CountAllVotes]

1. Wow!

Thanks for this information. I have some Series I bonds that were purchased in 2001 at the 3% base rate. Looks like they'll be earning 7.83% soon! :D :D :D

:dem: :kick: & recommend!

[swag]

2. Gotta love those old I-bonds.

Love that teaser rate. I needed a bit of cash for some auto-repair recently, so I did need to redeem some bonds, but rest assured, I redeemed the ones with a one percent fixed rate, and not the old 3 and 3.5 percenters.

Oh, here's some info on I-bonds:

http://www.savingsbonds.gov/indiv/research/indepth/ibonds/res_ibonds.htm

[CountAllVotes]

3. they used to report the rates on that link

but they do not any longer (well not in depth that is - must use the savings bond calculator to figure out "how much" now).

I won some money ($2,000) in 2001 and bought I-bonds with it. I am really glad I managed to hang on to them until they matured. Being they are good for 30 years, I have no intention of cashing them. To me, they are no different than retirement money.

And yes, I love the old I bonds! The newer ones (I had some of those for awhile) don't tend to pay much and I cashed them out. At least the 3% ones will always at least pay 3%. I think the lowest they ever paid was about 3.25%. They paid a load after Katrina (over 8%), I know that much.

It is a nice investment - tax-deferred and state tax exempt. :)