- ORIGINAL NEWS
Series I bonds are ‘still a good deal’ despite an expected falling rate in May, experts say
- SUMMARY
The interest rate on Series I bonds, government-backed savings instruments, could potentially see a slight decrease in May.
Experts predict an annual rate below the current 5.27% for bonds purchased before May 1st, but still higher than the 4.3% rate offered for bonds bought between May 1st and October 31st of this year.
This change in the annual rate is influenced by a combination of inflation data and other economic factors.
While the variable portion of the I bond interest is adjusted every six months based on the consumer price index, the fixed portion is harder to predict and can vary from 1.2% to 1.4%.
Despite the potential decrease in the annual rate, I bonds remain a viable investment option for long-term investors seeking to preserve purchasing power.
The fixed rate portion provides stability, even as the variable rate fluctuates with inflation.
However, for short-term investors, alternative investments such as Treasury bills or money market funds currently offer higher yields.
The I bond interest rate is adjusted twice a year, in May and November, so any potential changes will not impact bonds purchased before May 1st.
It’s important to note that the fixed rate component of I bond interest remains the same throughout the investment period, while the variable rate is adjusted every six months.
Investors should carefully consider their investment goals and timeline before deciding whether I bonds are a suitable option for them.
- NEWS SENTIMENT CHECK
- Overall sentiment:
neutral
Positive
“However, the fixed rate portion of I bond interest can be harder to predict, experts say.”
“That would be lower than the current 5.27% interest on I bond purchases made before May 1, but higher than the 4.3% interest offered on new I bonds bought between May 1, 2023, and Oct. 31, 2023.”
Negative
“The annual rate for Series I bonds could fall below 5% in May based on inflation and other factors, financial experts say.”
“That would be lower than the current 5.27% interest on I bond purchases made before May 1, but higher than the 4.3% interest offered on new I bonds bought between May 1, 2023, and Oct. 31, 2023.”