3 ms·
The penalty point is an important one for the above. If you only plan on holding them for the minimum of 12 months and the second half interest rate is 3% then
by sf_rob 4y ago
The penalty point is an important one for the above. If you only plan on holding them for the minimum of 12 months and the second half interest rate is 3% then your effective annualized return is 5.48% (1.0962^.5*1.03^.25).
>I-bonds issued today yield essentially zero percent after inflation, and this will be true for as long as you hold them.
Yes and no, I-bonds use a trailing inflation definition so you receive a real advantaged proportionally to the difference in current and past inflation rates; this is of course speculative.
- adabyron 4y agoJust a reminder, it's most likely 6% annualized return for the second 6 months.
- evanelias 4y agoOne minor I-bond hack: It's generally better to only buy them a few days before the end of the month, since it counts the same as if you bought them at the beginning of the month. For all timing purposes (interest, 12-month lock-up, and 5-year penalty), only the purchase year and month matter. The day is irrelevant. In other words, time it correctly and your money is only locked up for 11 months + a few days. And since interest accrues on the 1st of the month, this also helps the interest rate math slightly. Just don't go too close to end-of-month, since (iirc) it takes a few days for the transfer/purchase to go through online, and you don't want to get bumped to the next month.