8.0% interest
, what I have been making making for the last 6 months on some series I bonds purchased in October 2001. That is the good news, the bad news is that next month the rate on these same bonds goes to 0.0%
and stays there for 6 months. Why, mainly because in late 2008 gasoline prices were high, and they dropped by May of 2009.
Not everyone has found about series I bonds, perhaps you heard of series E or EE bonds that pay a fairly low fixed rate of interest. Series I bonds pay a small fixed rate for the life of the bond, plus the Consumer Price Index (CPI-U) for the prior 6 month period, ending in November or May.
Even if you have Series I bonds you may not realize rates can change drastically, and you likely may not be making any interest at all now. Some good news, if you have some series I bonds less than 5 years old, and you want out the three month interest penalty can be $0.00, thus no penalty at all.
Looking into the future, I am keeping some of my I bonds, Ones that have a 2% or 3% fixed rate look very good if inflation comes back. With an inflation rate of 3%, those bonds will pay 5% and 6%, respectively, not bad rates for 100% safe bonds, for sure better than any CD you can purchase today, and they are not inflation adjusted.
Actually the monthly interest rate of the first mentioned bonds was only 7.99%, but that would give a APY yield over 8%.
Discussion or questions anyone?
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