The Labor Department released the March CPI numbers today, and with these numbers, the I Bond inflation component for May 1st can be computed. Thanks to the recent inflation, it's a very high 4.83%. The only time this rate has been higher was in November 2005 which was after the Katrina-induced energy price spike. This 4.83% number is added on to the I Bond fixed rate to derive the I Bond composite rate.

If you buy I Bonds before May, you'll get 6 months of the current I Bond composite rate of 4.28% and 6 months of the new rate 6.06% (4.83% plus the current fixed rate of 1.2%).

Even when factoring in the 3-month interest penalty, this will give you an annualized return of about 4.4% for 14-months if you buy the I Bonds at the end of this month and redeem them on July 1, 2009. If high inflation continues and you don't need the money, you can always keep the I Bonds.

Unfortunately, the Treasury slashed the annual purchase limit to only $5,000 for online purchases and $5,000 for paper.

 

Submitted: Apr 16, 2008    Views: 986    Comments: 2    Likes: 1   


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Comments Received:

Sam Cass
Sam_Cass

Good information. Thank you.

Posted: Apr 21, 2008

JuneC
(Unregistered)

Obviously, the real problem here is clear - you are limited to $10K. It is a nice return on a very safe and worthwhile investment, but you need to have a lot of family members to make this work for you. I also don't like having paper certificates around.

Posted: Apr 24, 2008



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