If you were about to buy I bonds before October 31 to lock in the 0.90% fixed rate, stop. The one number on an I bond that stays with you for 30 years is about to move, and it is moving up.
October is the worst month of the year to buy one.
The number you are actually shopping for
An I bond pays two rates stacked together. Treasury sets the fixed rate the month you buy, and it never changes for the life of the bond. The inflation rate resets every six months, for every I bond, no matter when it was bought. Treasury sets both on May 1 and November 1. Bonds bought through October 31 carry a 0.90% fixed rate and a 4.26% composite rate for their first six months.
Only one of those is a reason to hurry. It is not the 4.26%.
David Enna, who has tracked savings bonds at TIPSwatch for years, ran the numbers on August 9. The 5-year TIPS real yield, which is what the market pays for a guaranteed return above inflation, sat at 1.11% on February 27, the day before the Iran war began. It is 2.13% now. Treasury does not publish a formula for setting the fixed rate, but Enna’s long-used rule of thumb, roughly 0.65 times the six-month average of that real yield, points to 1.20% on November 1, with 1.30% a live possibility. His read is that the fixed rate is “almost certainly going to increase above the current 0.90%.”
What that gap is worth
Run it on a single $10,000 bond held the full 30 years, in today’s dollars, meaning on top of whatever inflation does.
At 0.90% fixed, you end up with about $13,080. At 1.20%, about $14,300. At 1.30%, about $14,730.
Waiting from October to November is worth roughly $1,200, and possibly $1,650, on one $10,000 purchase. Nothing else about the bond changes. Same issuer, same tax treatment.
Here’s the catch. November’s composite rate is not known yet, because it gets set off inflation readings that run through September. If it lands low, your first six months pay less than 4.26% would have. That matters if you plan to cash out at 12 or 15 months. It stops mattering after your first reset if you are holding for years, because every I bond’s inflation half lands on the same number twice a year anyway.
Do this
Park the money in a high-yield savings account through October. It stays liquid and it keeps earning while you wait. Our best savings rankings and the savings calculator will tell you what you are giving up in the meantime, which is not much.
Check TreasuryDirect.gov on November 1, read the new fixed rate, then buy.
If you hold I bonds from 2022 with a 0.00% fixed rate, this is the swap worth running in November. You are years past the one-year lock, and trading a 0% fixed rate for something above 1% is real money for the next three decades. We ran the case for the current 0.90% bonds in June; the case gets stronger with a bigger fixed rate behind it.
Do not buy in September or October to beat a deadline that costs you money.
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