Investing in I bonds can be a great way to diversify your portfolio and earn a competitive interest rate. The US Department of Treasury adjusts I bond rates every May and November, combining a variable and fixed rate to form the composite rate. Understanding how I bond rates work can help you make informed decisions about your investments.
The variable rate of I bonds is tied to inflation and remains stable for six months following your purchase, regardless of subsequent Treasury adjustments. On the other hand, the fixed rate remains unchanged after purchase and is less predictable, as the Treasury does not disclose the methodology for calculating updates.
For current I bond holders, rate changes occur every six months based on the original purchase date. For example, if you purchased I bonds in September 2024, your variable rate would start at 2.96% and transition to the new rate of 1.90% in March 2025. However, your fixed rate would remain at 1.30%, resulting in a composite rate of 3.2%.
By staying informed about I bond rates and their impact on your investments, you can optimize your earnings and achieve your financial goals. Stay tuned to Extreme Investor Network for more expert advice on personal finance and investment strategies.