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☆ Series I bonds are ‘still a good deal’ despite an expected falling rate in May, experts say
▼ + stars: | 2024-04-17 | by ( Kate Dore | Cfp | ) www.cnbc.com time to read: +2 min

Jetcityimage | Istock | Getty ImagesHow the I bond rate worksThe U.S. Department of the Treasury adjusts I bond rates every May and November. The variable rate portion resets every six months starting on the investor's I bond purchase date, not when the Treasury Department announces rate adjustments. The 1.3% fixed rate "makes it very attractive" for investors who want to preserve purchasing power long term, according to Tumin. How the fixed rate could changeSince the variable rate for I bonds is based on six months of inflation data, experts agree it will fall from 3.94% to 2.96% in May. Enna looks at a half-year average of real yields for 5- and 10-year TIPS to predict fixed rate changes.

Persons: David Enna Organizations: Istock, U.S . Department of, Treasury, Treasury Department Locations: Enna

November's rate for new purchases could be higher than the current 4.3% interest on I bonds bought through Oct. 31, leaving some investors wondering about whether to buy more. The variable rate adjusts every six months based on inflation and the Treasury can also change the fixed rate or keep it the same. (The fixed rate stays the same for investors after purchase, and the variable rate adjusts every six months based on the investor's purchase date.) Based on inflation, the variable rate in November will likely increase to 3.94% from 3.38%. But they'd need to purchase new I bonds between Nov. 1 and April 30 to score the increased fixed rate.

Persons: Ken Tumin, David Enna, you'll, DepositAccounts.com Organizations: Getty, U.S . Department of, Treasury Locations: —

Jetcityimage | Istock | Getty ImagesAs inflation falls, investors are weighing whether to buy or sell Series I bonds amid other competitive options for cash. "Cooling inflation means that interest rates are likely near the end of their increases," said certified financial planner Ted Haley, president of Advanced Wealth Management in Portland, Oregon. But in the meantime, many investors are waiting for the Federal Reserve's next interest rate decision later this month, which may affect cash yields. While the yearly rate fell to 4.3% in May 2023, the fixed rate portion climbed to 0.9%, making the asset more attractive for long-term investors. Of course, the next fixed rate for I bonds could be higher or lower.

Persons: Ted Haley, Haley, David Enna, Enna, Ken Tumin, DepositAccounts.com Organizations: Istock, Getty, U.S . Bureau of Labor Statistics, Advanced Wealth Management, Federal Locations: Portland , Oregon

☆ Series I bond rate expected to fall to below 4% in May, experts say
▼ + stars: | 2023-04-12 | by ( Kate Dore | Cfp | ) www.cnbc.com time to read: +2 min

But rates have been falling and the yield will decline again in May, experts say. Annual inflation rose by 5% in March, down from 6% in February, according to the U.S. Department of Labor. The annual rate may drop below 4%Based on inflation data from the past six months, Tumin says the variable portion of the I bond rate could drop to 3.38% in May. If the fixed rate remains at 0.4%, the new annual rate may drop to 3.79%, Tumin said. Of course, the combined annual yield is only an estimate until TreasuryDirect announces new rates in May.

☆ Some Treasury bills are now paying 5%. Here's what investors need to know
▼ + stars: | 2023-02-23 | by ( Kate Dore | Cfp | ) www.cnbc.com time to read: +2 min

T-bill yields have been low since the Great Recession, with the exception of 2018. Currently, shorter-term Treasury yields are higher than longer-term yields, which is known as an inverted yield curve. How interest rates affect bond valuesAnother factor to consider is the current economic environment, including future moves at the Fed. Although it's expressed in years, it's different from the bond's maturity since it factors in the coupon, time to maturity and yield paid through the term. "It's always the Fed; the Fed controls short-term interest rates," said David Enna, founder of Tipswatch.com, a website that tracks Treasury inflation-protected securities and other assets.

☆ Your last chance to secure 9.62% annual interest for Series I bonds is Oct. 28
▼ + stars: | 2022-10-25 | by ( Kate Dore | Cfp | ) www.cnbc.com time to read: +2 min

Insta_photos | Istock | Getty ImagesHow to estimate I bond rates for one yearThere are two parts to I bond rates: a fixed rate, which stays the same after purchase, and a variable rate, which shifts twice per year based on inflation. It's nice to know what interest rates you will get when you're committing to a 12-month lockup. Jeremy Keil Financial advisor at Keil Financial Partners"A short-term investor — somebody just wanting to put away cash — should definitely buy in October," he said. The downsides of buying I bondsWhile roughly knowing I bond rates for one year may be appealing, there are a few things to consider before buying, experts say. "The biggest downside is you are locked in for 12 months," Keil said.

☆ How to get the 'best of both worlds' for Series I bond interest rates before November
▼ + stars: | 2022-10-18 | by ( Kate Dore | Cfp | ) www.cnbc.com time to read: +3 min

RyanJLane | E+ | Getty ImagesAfter a difficult year for the stock market, investors have poured money into Series I bonds, a nearly risk-free and inflation-protected asset that's paying a record 9.62% annual interest rate through October. While I bond rates shift twice yearly based on inflation, you can still lock in 9.62% annual interest for six months — as long as you complete the purchase by Oct. 28. You can estimate I bond rates for one yearThere are two parts to I bond rates: a fixed rate, which stays the same after purchase, and a variable rate, which shifts twice per year based on inflation. It's nice to know what interest rates you will get when you're committing to a 12-month lockup. "The biggest downside is you are locked in for 12 months," Keil said.

☆ Series I bond interest expected to fall to roughly 6.48% in November. But that's still a 'really good rate,' experts say
▼ + stars: | 2022-10-14 | by ( Kate Dore | Cfp | ) www.cnbc.com time to read: +1 min

Morsa Images | E+ | Getty ImagesFixed rate for I bonds will 'most likely be zero'I bond rates have two parts, a fixed rate, which remains the same after purchase, and a variable rate, which changes every six months based on inflation. However, there's no set formula for the fixed rate, which is currently 0%, according to David Enna, founder of Tipswatch.com, a website that tracks I bond rates. While he predicts a 50/50 chance of the fixed rate changing, he said many experts believe it won't be necessary due to existing high demand for I bonds. "If we get to 0.3% or 0.5% [for the fixed rate], it will be somewhat a surprise," Enna said. Although interest rates are climbing, most banks still aren't paying more than 4% for a one-year CD, he said.

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