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You Bought Blockbuster I Bonds. Here's What to Do With Them Now.
You Bought Blockbuster I Bonds. Here’s What to Do With Them Now.
The interest rate on new I bonds fell to about 3% on Nov. 1
By Katherine Hamilton
https://x.com/kat_ham_
katherine.hamilton@wsj.com
Nov. 1, 2024 5:30 am ET
The millions of people who bought I bonds when inflation peaked have a decision to make: Hold them, redeem them or exchange them for new ones.
The inflation-linked government savings bonds were a hit with investors when they offered a guaranteed return of 9.6% in 2022, stoking so much demand that it took down the website where they are sold.
{paywall}
The interest rate on new I bonds fell to about 3% on Nov. 1
By Katherine Hamilton
https://x.com/kat_ham_
katherine.hamilton@wsj.com
Nov. 1, 2024 5:30 am ET
The millions of people who bought I bonds when inflation peaked have a decision to make: Hold them, redeem them or exchange them for new ones.
The inflation-linked government savings bonds were a hit with investors when they offered a guaranteed return of 9.6% in 2022, stoking so much demand that it took down the website where they are sold.
{paywall}
MSN reruns articles from "The Wall Street Journal." I'll find this story there. Here it is.
You Bought Blockbuster I Bonds. Here’s What to Do With Them Now.
Story by Katherine Hamilton • 8h • 3 min read
The millions of people who bought I bonds when inflation peaked have a decision to make: Hold them, redeem them or exchange them for new ones. ... The inflation-linked government savings bonds were a hit with investors when they offered a guaranteed return of 9.6% in 2022, stoking so much demand that it took down the website where they are sold. ... That rate was short-lived. I bond rates reset based on inflation every six months. Any purchased back at that peak now have a more modest 1.9% rate. ... New I bonds issued as of Friday come with a yield of 3.11%, a drop from the prior rate of 4.28%.
I bonds still offer respectable returns, particularly for people worried about inflation, financial advisers say. Buyers just have to put in a little bit more work because their returns have gone down while other investments have gotten more attractive. ... The key factor to determining whether to hold or trade in an I bond is when you bought it. The return of your I bonds is calculated based on a fixed rate determined when you bought the bond and a moving rate based on the current level of inflation. Since inflation peaked in 2022, the moving rate went down but the offered fixed rate went up.
In addition to trading an old I bond for a new one, you can redeem the bond completely for another investment and pay taxes on the gain. Investors can avoid paying taxes on I bonds if the proceeds are used for qualified higher-education expenses and their income falls below certain thresholds. ... Paying the taxes may be worth it since the current I bond rate is the lowest it has been since 2021 and many other investments offer higher interest right now. The benchmark 10-year Treasury currently offers a fixed yield of 4.3%.
Old vs. new
You can buy up to $10,000 in electronic I bonds for yourself each year. Investors are required to hold for 12 months before redeeming. Interest is exempt from state and local taxes. ... The Treasury Department resets both the fixed and moving portion of the rate of return on I bonds twice a year, in May and November. ... Investors who bought bonds between May 2020 and October 2022 and still hold them are stuck with a fixed rate of 0%. Their interest rates are decided solely by the inflation rate. ... The Treasury Department has since boosted the fixed portion. New I bonds currently have a fixed rate of 1.2%.
{snip}
Imani Moise contributed to this article.
Write to Katherine Hamilton at katherine.hamilton@wsj.com
Story by Katherine Hamilton • 8h • 3 min read
The millions of people who bought I bonds when inflation peaked have a decision to make: Hold them, redeem them or exchange them for new ones. ... The inflation-linked government savings bonds were a hit with investors when they offered a guaranteed return of 9.6% in 2022, stoking so much demand that it took down the website where they are sold. ... That rate was short-lived. I bond rates reset based on inflation every six months. Any purchased back at that peak now have a more modest 1.9% rate. ... New I bonds issued as of Friday come with a yield of 3.11%, a drop from the prior rate of 4.28%.
I bonds still offer respectable returns, particularly for people worried about inflation, financial advisers say. Buyers just have to put in a little bit more work because their returns have gone down while other investments have gotten more attractive. ... The key factor to determining whether to hold or trade in an I bond is when you bought it. The return of your I bonds is calculated based on a fixed rate determined when you bought the bond and a moving rate based on the current level of inflation. Since inflation peaked in 2022, the moving rate went down but the offered fixed rate went up.
In addition to trading an old I bond for a new one, you can redeem the bond completely for another investment and pay taxes on the gain. Investors can avoid paying taxes on I bonds if the proceeds are used for qualified higher-education expenses and their income falls below certain thresholds. ... Paying the taxes may be worth it since the current I bond rate is the lowest it has been since 2021 and many other investments offer higher interest right now. The benchmark 10-year Treasury currently offers a fixed yield of 4.3%.
Old vs. new
You can buy up to $10,000 in electronic I bonds for yourself each year. Investors are required to hold for 12 months before redeeming. Interest is exempt from state and local taxes. ... The Treasury Department resets both the fixed and moving portion of the rate of return on I bonds twice a year, in May and November. ... Investors who bought bonds between May 2020 and October 2022 and still hold them are stuck with a fixed rate of 0%. Their interest rates are decided solely by the inflation rate. ... The Treasury Department has since boosted the fixed portion. New I bonds currently have a fixed rate of 1.2%.
{snip}
Imani Moise contributed to this article.
Write to Katherine Hamilton at katherine.hamilton@wsj.com
I'm one of those who bought the annual limit back in October 2022. The interest I'm getting now is not so great. I need to think about what to do.
Personal Finance
Treasury Department announces new Series I bond rate of 3.11% for the next six months
Published Thu, Oct 31 2024 • 9:59 AM EDT | Updated Thu, Oct 31 2024 • 11:10 AM EDT
Kate Dore, CFP®
Key Points
• Series I bonds will pay 3.11% through April 2025, the U.S. Department of the Treasury announced Thursday.
• Linked to inflation, the latest I bond rate is down from the 4.28% yield offered since May and the 5.27% rate offered in November 2023.
• Current I bond owners will also see rates adjust, based on their purchase date.
The U.S. Department of the Treasury has announced new Series I bond rates.
Linked to inflation, newly purchased I bonds will pay 3.11% annual interest from November 1 through April 30, 2025, which is down from the 4.28% yield offered since May and the 5.27% yield rate offered in November 2023.
The new rate includes a variable portion of 1.90% and a fixed portion of 1.20%. The fixed rate is down from 1.3% announced in May.
After hitting a record high of 9.62% in May 2022, the I bond yield is down significantly. But the fixed-rate portion of the yield still appeals to some long-term investors, experts say.
{snip}
Treasury Department announces new Series I bond rate of 3.11% for the next six months
Published Thu, Oct 31 2024 • 9:59 AM EDT | Updated Thu, Oct 31 2024 • 11:10 AM EDT
Kate Dore, CFP®
Key Points
• Series I bonds will pay 3.11% through April 2025, the U.S. Department of the Treasury announced Thursday.
• Linked to inflation, the latest I bond rate is down from the 4.28% yield offered since May and the 5.27% rate offered in November 2023.
• Current I bond owners will also see rates adjust, based on their purchase date.
The U.S. Department of the Treasury has announced new Series I bond rates.
Linked to inflation, newly purchased I bonds will pay 3.11% annual interest from November 1 through April 30, 2025, which is down from the 4.28% yield offered since May and the 5.27% yield rate offered in November 2023.
The new rate includes a variable portion of 1.90% and a fixed portion of 1.20%. The fixed rate is down from 1.3% announced in May.
After hitting a record high of 9.62% in May 2022, the I bond yield is down significantly. But the fixed-rate portion of the yield still appeals to some long-term investors, experts say.
{snip}