Treasury I bond rates poised to slide in November

[mahatmakanejeeves]

Yahoo Money

Treasury I bond rates poised to slide in November

Kerry Hannon · Senior Columnist
Sun, October 16, 2022 at 7:32 AM

The Treasury Department’s popular inflation-protected I bonds won’t return as much when the rate adjusts on November 1, so buying them now is a better bet.

The rate will be at least 6.48%, according to estimates from Ken Tumin, a senior industry analyst at Lending Tree and founder of DepositAccounts.com, down from the current 9.62% the I bonds are offering until the end of October. The rate applies for the first six months you hold the bond.

That’s the second-best rate since November 2005 when the composite rate was 6.73% and the seventh-highest since the bond’s introduction in 1998, according to Treasury data. But if inflation cools quickly over the next six months, the bond won’t be worth as much.

“For November I bond purchases, we only can know the first six months I bond inflation rate. We won’t be able to estimate exactly the May I bond inflation rate until mid April 2023,” Tumin said. “It’s possible that the inflation rate could be much less. Then, the I bond will look much less appealing — like it has been before 2021.”

{snip}

[JohnSJ]

1. Still a good rate

[we can do it]

2. Help me out a little with this, how long is that rate for?

Does it adjust? Is there minimum amount/ increments?

TIA

[mahatmakanejeeves]

3. Buy one now, through October 31, and you get a rate of 9.62%. Wait until November 1 to buy, and

you're likely to end up with a lower rate.

... 9.62% the I bonds are offering until the end of October. The rate applies for the first six months you hold the bond.

Minimum purchase is (looking it up) ... Oh, check with Treasury Direct. They'll answer all your questions.

I bonds

Series I savings bonds protect you from inflation. With an I bond, you earn both a fixed rate of interest and a rate that changes with inflation. Twice a year, we set the inflation rate for the next 6 months.

Current Interest Rate
Series I Savings Bonds
9.62%

For savings bonds issued May 1, 2022 to October 31, 2022.

Complete the purchase of this bond in TreasuryDirect by October 28, 2022 to ensure issuance by October 31, 2022.

{snip all sorts of information}

[we can do it]

4. Thank you. Sure beats bank savings rate.

[progree]

5. Maximum purchase is $10,000 per calendar year. That's the big drawback

Last edited Mon Oct 17, 2022, 10:55 AM - Edit history (1)

One HAS TO set up a TreasuryDirect account for this. You can't get them at Vanguard, Fidelity, etc., or from your brokerage.

You can't touch them for a year. No matter how drastic your need, no matter how unusual your circumstances.

Between one and five years, if you withdraw, you lose 3 months of interest, which is not a Titanic-sized disaster, you still get 9/12 (3/4) of the interest that you expected for that year, which is still mighty high: 3/4 * 9.62% = 7.21%. 3/4 * 6.5% = 4.9%. (Some people go apeshit when you mention penalty, OMG, the NAKBA, the NAKBA!)

Edit: 6.5% is about what they are expecting the rate to be if you purchase after October 31. The 6.5% rate, if that is what it is, will be good for an I-bond purchased between Nov 1 and May 1, and you'll get that rate for a full 6 months no matter when during that period you buy it. Then the interest rate will reset again. It resets May 1 and November 1 every year.

(see Mahatmakanejeeves above where, to get the current 9.62% rate, "Complete the purchase of this bond in TreasuryDirect by October 28, 2022 to ensure issuance by October 31, 2022.").

After five years you can withdraw without penalty.

Its free of state and local taxes.

There's also a provision that allows you to buy an extra up to $5,000 in paper bonds with your tax refund, if you have one coming (or can make one come by making a big estimated tax payment before the end of the year).

[twodogsbarking]

6. You have summed it up nicely. Rare, even at DU.

[progree]

7. Thanks 😊 /nt