11/01/22 New I-Bonds Fixed Rate

[Deleted]

Series I: 0.40% Fixed...6.48 Variable...6.89% Composite

TREASURY ANNOUNCEMENT:
The composite rate for Series I Savings Bonds is a combination of a fixed rate, which applies for the 30-year life of the bond, and the semiannual inflation rate. The 6.89% composite rate for I bonds bought from November 2022 through April 2023 applies for the first six months after the issue date. The composite rate combines a 0.40’% fixed rate of return with the 6.48% annualized rate of inflation as measured by the Consumer Price Index for all Urban Consumers (CPI-U). The CPI-U increased from 287.504 in March 2022 to 296.808 in September 2022, a six-month change of 3.24%.

[yogibearbull]

IMO, 5-yr TIPS held to maturity are better now. The 5-yr real rate was +1.72% on Friday (vs only +0.40% for new I-Bonds). You get the same CPI adjustments. TIPS funds are different due to duration and real rate changes.
LINK

[Chahta]

yogibearbull, but there is interest rate risk with TIPS that "I" bonds don't have, right?

[yogibearbull]

Nov 5, 2022 15:59:22 GMT Chahta said:

yogibearbull , but there is interest rate risk with TIPS that "I" bonds don't have, right?

Not if you hold 5 (or less)-yr TIPS to maturity. 

[Deleted]

I'm not sure how to value the tax deferral feature of Series I Bonds.
Considering any investment guaranteeing a real rate above inflation I consider a gift, plus 6.89% is still a very attractive rate, I will probably stick with I Bonds in taxable and buy TIPS in deferred.

[Deleted]

I liked this comparison of I-Bonds and TIPs now - tipswatch.com/2022/11/20/i-bonds-vs-tips-right-now-its-clearly-advantage-tips/

It agrees with what YBB said - TIPs hold the advantage over I-Bonds as to yield. Also, if you haven't looked at it, the treasury real yield rate is at - home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_real_yield_curve&field_tdr_date_value_month=202212

I will be buying another I-Bond this year. I didn't understand how the author was able to get a real yield of 2%+ on a 10 year TIPs, but for fixed income that didn't sound bad for a part of a portfolio.

[Deleted]

I will be buying Series I-Bonds. My dilemma is whether to buy the annual limit this month or buy half now and half in May in case the fix rate rises.

David's latest commentary:

tipswatch.com/2023/01/03/i-bonds-a-not-so-simple-buying-guide-for-2023/

[roi2020]

I will be purchasing Series I Bonds at the end of January¹.
5-Year TIPS now offer attractive real yields and may be a better option for longer-term investors.
I may also buy TIPS later in the year (after my T-Bills mature) if real yields remain attractive.

¹ Series I bond purchases made late in the month will earn interest for the entire month.

[yogibearbull]

Alert on #IBonds, 1/12/23
While the current 6.89% rate will apply to I-Bond purchases until 4/28/23 (rate valid for 6 months from the purchase date), the preliminary projections for the next rate on 5/1/23 are for only 0-1%. About the half of the #CPI data needed for 5/1/23 rate is in, and inflation is trending down. I-Bonds that are 12+ months old after 5/1/23 may be sold with 3-mo interest penalty.
ybbpersonalfinance.proboards.com/thread/209/savings-bonds-6-months-nov?page=4&scrollTo=897

[retiredat48]

yogibearbull,Chahta,roi2020, et al...I received the following article from a lurker who holds several I-bonds....discusses how/when to exit.  Seems very worthwhile article.

" The I Bond exit ramp is now open; proceed with caution "



link

[yogibearbull]

retiredat48 , I follow David Enna/@tipswatch at X/Twitter.

The I-Bonds aren't as great deal as they used to be. New info will be available on Oct 12 (CPI, if government doesn't shutdown) and Nov 1 when the fixed rate would also be known.

Critical dates to watch are 12-mo window, semiannual dates from purchase date, and month-start (good to sell) and month-end (good to buy) to get whole month interest. There is also 3-mo interest penalty up to 5 years. Current rate for purchase is 4.3%.
treasurydirect.gov/savings-bonds/i-bonds/i-bonds-interest-rates/