TraderWise

The new fixed rate for Series I Savings Bonds (“I Bonds”) was announced on 11/1/10 to be 0.0%, down from the previous fixed rate of 0.20%. Inflation protection is being held at a relative premium right now, so this isn’t all that surprising.

The new fixed rate for Series I Savings Bonds (”I Bonds”) was announced on Monday to be 0.7%. A few readers asked if I thought this was a good time to buy.

As a long-term investment, a 0.7% real yield makes I-Bonds a poor choice, as you can buy TIPS with much better yields. As of yesterday, a 5-year TIPS had a 3.66% real yield.

Just thought I’d mention that I used TreasuryDirect today to purchase another $5,000 of Series I savings bonds. If you buy them by the end of April, you can lock in an investment that will get you about 3.08% APR over 11 months. The deadline is fast approaching, and I didn’t want to cut it that close. More details here.

New inflation numbers are out, so it’s time for another semi-annual update:

New Inflation Rate
March 2009 CPI-U was 212.709. September 2009 CPI-U was 215.969, for a semi-annual increase of 1.53%. Using this official formula, the variable interest rate for the next 6 months will be approximately 3.07% based on current fixed rates.

This is just a quick note to say that the March inflation numbers are out, so we can now calculate the new Series I Savings Bond rates that will go into effect in May.

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 roughly 4.60%. The fixed rate currently stands at 0%, and it seems unlikely that it will be rising in the current interest rate climate.

Even though the current interest rates on Series I Savings Bonds aren’t much higher than other alternatives, these I-Bonds do have some unique characteristics that can keep them attractive.

This is just a quick note to say that the Treasury has posted the new Series I Savings Bond rates. As I noted previously, the variable portion of the rate dropped from 3.06% to 1.54% as a result of lower inflation. At that time, however, the fixed portion of the rate was still unknown.

Not quite a year ago, my wife and I started investing in Series I Savings bonds. For those that are unaware, “I Bonds” are low risk, inflation-indexed savings bonds issued by the Federal government.

This is just a quick note to say the new Series I U.S. Savings Bond interest rates have been released. I haven’t written much (anything?) about savings bonds in the past, but I’m planning on changing that in the near future.

In the mean time, I’ll just say this… The interest rate on Series I bonds is made up of a fixed rate component and an inflation component. Rates are updated twice a year, in May and November.