The Name’s Bond, I Bond

Photo by Ilya Chunin on Unsplash

Yes, those I Bonds.

Though perhaps not delivered quite as smooth or cool as the more well-known Bond, I Bonds (short for "Series I Savings Bonds") have been something of great interest to many over the last several years. Those of you who have been readers for long enough may remember when we were gobbling up I Bonds back in 2020-2022.

And for good reason, as they were yielding quite a bit more than other options, peaking at 9.62% at the height of the inflation readings in the economy.

As the inflation rate has come back down to Earth, so has the I Bond interest rate. Alas, those juicy yields we enjoyed before are no more.

So let’s do a quick follow-up to our (quite popular) post about I Bonds from a few years ago (I Bonds? Yes Please).

What’s the yield now?

I've been watching the yields for a while now (I Bond yields change every 6 months), and with the most recent announcement in May 2024, I think it's time to consider selling if someone purchased the I Bonds around 2020-2022.

Note that this applies specifically to those who purchased the I Bonds between May 2020 and October 2022. That's because different I Bonds yield different amounts depending on when they were purchased. An I Bond interest rate has two components: (1) a fixed rate that is set depending on when you purchased the I Bond and (2) a variable rate that changes every 6 months.

The fixed-rate portion of the I Bonds issued from May 2020 to October 2022 is 0.00%. I Bonds issued outside of that time frame would have some fixed rate above zero, which may make your current I Bond interest rate more attractive.

Any thoughts on what to do?

If you bought the I Bonds during that May 2020 - October 2022 period, they are now yielding 2.96%. That's not terrible, especially since they are exempt from state income taxes (hi, California) and tax-deferred until you sell on the Federal side. But you may be able to do better in a high-yield savings account or in other safe alternatives such as CDs or short-term Treasury securities.

So if you purchased around those dates, you might want to consider selling. Or you can wait another 4 months to see what rates do in November (the next time the variable component changes). If selling is something you're interested in pursuing, here's a convenient link to the TreasuryDirect website.

Final comments

Now please remember this spy-themed infomercial on I Bonds is not to be taken as financial advice. Rather, think of me as our good friend Bond described, "What a helpful chap."

If you would like to read in more detail about I Bonds, see this previous post on our blog: I Bonds? Yes Please