iBond Rates Came Back Down to Earth

Benjamin Haas |
Categories
Investing
Financial Planning

Recently the U.S. Treasury Department issued an update to the Series I Bond rates for the next six months. The Treasury adjusts these rates every May and November based on the current rate of inflation. The new rate will be 3.11% which is down from the 4.28% yield from May, and the 5.27% rate from last November 2023. As a reference, the rate peaked in May of 2022 at 9.62%.

The historically elevated iBond rates received lots of headlines these past few years, which is why we know several clients may have taken the opportunity to buy these bonds. If you already own iBonds, this decrease in interest rate will affect your interest as well, so you may want to consider at what point you would rather reallocate your savings from iBonds to something different, should you feel there is better opportunity elsewhere.

As a reminder, here are some key things to know about iBonds:

  1. You can only purchase $10,000 worth of bonds per person, per year. While rates were very attractive for a couple years (offset by the pain of high rate of inflation since those two things move in concert), the opportunity to capitalize on higher rates is certainly capped.

  2. You must purchase directly through the US Treasury. Hence, we can’t do this for you, nor can we help make any changes now if you feel the 3.11% rate no longer serves you.

  3. Much like a CD, you have to hold the bond for some time. It’s not 100% liquid like a savings account or a mutual fund or other similar types of investments. Bonds can earn interest up to 30 years but you must hold them for a minimum of 1 year. And if you cash it in within the first 5 years, you surrender the last 3 months of interest when you do.

If you have any questions or concerns, don’t hesitate to reach out to us.

Reference: https://www.cnbc.com/2024/10/31/series-i-bond-rate-april-2025-treasury.html

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Investment Advice offered through Great Valley Advisor Group, a Registered Investment Advisor. Great Valley Advisor Group and Haas Financial Group are separate entities. This is not intended to be used as tax or legal advice. Please consult a tax or legal professional for specific information and advice.