Welcome to Extreme Investor Network, where we provide you with exclusive and valuable insights into the world of personal finance. Today, we’re diving into the annual rate predictions for Series I bonds and what it means for investors.
According to experts, the annual rate for Series I bonds is expected to fall below 5% in May, based on the latest inflation data and other factors. While this would be lower than the current 5.27% interest on pre-May 1 purchases, it’s still higher than the 4.3% interest offered on new I bonds bought between May 1, 2023, and Oct. 31, 2023.
Despite the anticipated rate decline, I bonds remain a solid option for long-term investors, as noted by Ken Tumin, founder and editor of DepositAccounts.com. These bonds, backed by the U.S. government, have seen a surge in demand amid higher inflation, with experts predicting a rate drop to around 4.27% next month.
For short-term investors, there are currently higher-yield options available, such as Treasury bills, money market funds, or some certificates of deposit.
So, how does the I bond rate work? The U.S. Department of the Treasury adjusts I bond rates every May and November based on a variable and fixed portion. The variable portion changes every six months based on the consumer price index, while the fixed portion remains the same for investors post-purchase.
Currently, the variable rate is 3.94%, and the fixed rate is 1.3%, resulting in a combined rounded yield of 5.27% for I bonds purchased between Nov. 1 and April 30. This attractive fixed rate of 1.3% is appealing to investors looking to preserve purchasing power long-term.
When it comes to predicting changes in the fixed rate, experts anticipate a drop from 3.94% to 2.96% in May, while the fixed rate is harder to pinpoint due to the Treasury’s formula not being disclosed. David Enna, founder of Tipswatch.com, expects the fixed rate to be around 1.2% or 1.3% in May, with a potential of 1.4%.
Investors can assess these predictions and various factors to make informed decisions about their investments in I bonds. Stay tuned to Extreme Investor Network for more in-depth insights on personal finance topics to optimize your financial growth and security.
