"Money is a terrible master but an excellent servant." -P.T. Barnum
Happy New Year! And good riddance to 2022, which saw both the equity and bond markets struggle as the Fed embarked on a relentless rate hike campaign in an effort to combat too-high inflation. The good news is you can capitalize on the too-high inflation rate via Series I Savings Bonds!
We last wrote about I Bonds in April 2022. The current Series I bonds are attractive at a 6.89% composite yield consisting of a 0.4% fixed rate and a 3.24% semiannual inflation rate. Here is the calculation via TreasuryDirect.gov:
Each calendar year you can purchase up to $10,000 in electronic I bonds and up to $5,000 in paper I bonds (via your tax refund). Also, Treasury recently did a major upgrade to the TreasuryDirect.gov website interface making it simpler to use.
For investors attempting to time their I Bonds purchases, we recommend waiting until April 12th when BLS releases the March CPI report. This way, we will know the next Series I bond semiannual inflation adjustment figure, which will be based on the actual CPI change that occurs between September 2022 and March 2023. Once we have that CPI figure, we will know whether it makes sense to purchase the current 6.9% I bond or to wait for the May 1 adjusted rate.
Learn more about how to buy electronic savings bonds at TreasuryDirect.gov site.
Brinker Stock Advisor is a reader-supported publication. To receive new posts and support our work, consider becoming a free or paid subscriber.