New I-Bond Rate 4.30%, 5/1/23

[yogibearbull]

New I-Bond Rate 4.30%, 5/1/23

Fixed/base rate 0.90%
Semiannual inflation 1.69%
Composite rate = [0.0090 + (2 x 0.0169) + (0.0090 x 0.0169)] = 0.042951 or 4.30%

www.treasurydirect.gov/savings-bonds/i-bonds/i-bonds-interest-rates/

[Deleted]

Thanks for the info, YBB.
Announcing before May 1st is unusual.

[mozart522]

.9% fixed rate. We haven't seen that for a long time. Almost 1% real return.

[marquay]

I bought few I Bond in Jan. 2022. I checked the rate of my 2 I-Bond as of May 2, 2023, it says

Issued date 2/2013. 6.48%

Issued date 1/2022. 6.48%

Issued date 5/2022. 3.38%. I'm puzzled why is this so low? Should I just sell it and buy 3 month T-bill. 5.27% ?

Thank you

[Deleted]

May 3, 2023 12:32:36 GMT marquay said:

I bought few I Bond in Jan. 2022. I checked the rate of my 2 I-Bond as of May 2, 2023, it says

Issued date 2/2013. 6.48%

Issued date 1/2022. 6.48%

Issued date 5/2022. 3.38%. I'm puzzled why is this so low? Should I just sell it and buy 3 month T-bill. 5.27% ?

Thank you

Your 5/2022 has a 0% fixed rate. Your 3.38% rate is the inflation adjustment. Selling before 5 years you'll forfeit the last 3 months of interest as a penalty.

[racqueteer]

Correct me if I'm wrong, but if the total you're getting is 3.38% and 5% is available elsewhere, would it not make sense to hold for 3 months at the 3.38% rate, then sell, forfeit that 3 months interest, and then buy something paying more?  That was my plan.  Am I overlooking something?

Edit: Marquay's situation is a bit different, as there is an additional 0.9% fixed on THAT tranche, and that fixed rate has value in itself.  MY tranches are at 0% fixed.

[racqueteer]

May 3, 2023 12:32:36 GMT marquay said:

I bought few I Bond in Jan. 2022. I checked the rate of my 2 I-Bond as of May 2, 2023...
Thank you

How/where did you see those rates?  I browsed and couldn't find that information on the site...

[Deleted]

The fixed rate for all of marquay's bonds is 0%. The one from Feb. 2013 will change to reflect the current inflation adjustment of 3.38% on Aug. 1st (the 6 month holding anniversary). The Jan. 2022 on July. 1st.

Yep, I think it is better to lose any early redemption penalty 3 months after the rate change. You don't want that penalty to be subtracted from the generous 6.48% rate you've been receiving.

[marquay]

Django,
For the Issue date 2/2013, there's no more penalty (hold over 5 years )but soon the rate will drop to 3.38% in Aug as you said. So Is it better to redeem now (May) and buy something else? don't have to wait till Aug.?

For the issue date 1/2023. and. 5/2023 yes, I understand there's a 3 mo. interest penalty and better to redeem now?(May)

Thank you

[Deleted]

May 3, 2023 17:38:34 GMT marquay said:

Django,
For the Issue date 2/2013, there's no more penalty (hold over 5 years )but soon the rate will drop to 3.38% in Aug as you said. So Is it better to redeem now (May) and buy something else? don't have to wait till Aug.?

For the issue date 1/2023. and. 5/2023 yes, I understand there's a 3 mo. interest penalty and better to redeem now?(May)

Thank you

Even although you could sell the 02/2013 now without penalty, you are getting 6.48% interest on it until Aug. That's a very nice rate for a low risk investment. If it were me, I'd hold until Aug.

Edited to add: for the others, wait 3 months after the rate drops to redeem. You don't want the 3 month penalty to come out of what you earned during the higher rate period.

[marquay]

Django, I was not so sure earlier with your reply , but now I understand. Thank you. I'll hold off selling in May. and follow what you said.

BTW I mistyped the last 2 I Bond should say:

Issue date 1/2022. and  5/2022,    not 2023.