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Are Series I Savings Bonds Still Worth Buying?

FEE-ONLY PLANNING BLOG

May 23 2022

Are Series I Savings Bonds Still Worth Buying?

By John H. Robinson, May 5, 2022

Consumers who purchased U.S. Treasury-issued Series I savings bonds prior to the end of April 2022 locked in 7.12% over the first six months and incredible 9.6% for the following six months.  This maths out to an 8.36% rate of return over the full 12 months.  It is the highest rate ever paid on I-bonds since they were first introduced in 1998.  But what if you didn’t get around to purchasing the before the April 30th cutoff – Are they still worth buying?… Heck yeah!

Consumers who purchase I-bonds from now through November will still lock in the 9.6% rate for six months!!!  The minimum holding period for savings bonds is 12 months, so buyers are at the mercy of the urban consumer price index (CPI-U) for the final six months. Even in the highly unlikely event that monetary policy efforts to quash inflation are immediately successful, the worst-case scenario is 0% for the final 6 months for a government guaranteed total 12 month return of more than 4%.   I would be willing be to bet that your current cash reserves are earning far less than that.

I am also willing wager that inflation will not be so easily subdued.  Even if the CPI ticks down to a far more modest 3-4% over the next six months, that rate paired with the 9.6% for the first six months, makes the purchase proposition only nominally less enticing than the 7.12%/9.6% pairing opportunity you just missed.  Oh, and, by the way, when you cash them in, the interest is exempt from state income tax.

It is further worth mentioning that if you have already have I-bonds in a TreasuryDirect account and/or you still have old paper I-bond certificates lying around (the Treasury stopped over-the-counter sales of paper bonds on 12/31/20210), those bonds will also earn both the 7.12% and the 9.6% rates. Cha-ching!

For information on how to purchase savings bonds, see the articles below:

How to Buy Series I Savings Bonds (TheBalance.com)

TreasuryDirect.gov

Inflation bonds are earning eye-popping rates:  9.62% (NY Times)

Now is a good time to buy this inflation-indexed savings bond (Washington Post)

 

John H. Robinson is the owner/founder of Financial Planning Hawaii , Fee-Only Planning Hawaii, and Paraplanning Hawaii.  He is also a co-founder of fintech software-maker Nest Egg Guru. 

Written by J.R. Robinson, Financial Planner · Categorized: Financial Planning, Portfolio Management & Investing

John “J.R.” Robinson is the owner/founder of Financial Planning Hawaii and Fee-Only Planning Hawaii and is a co-founder of personal finance software maker Nest Egg Guru.

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© 2005–2025 | Financial Planning Hawaii | Fee-Only Planning Hawaii is a business division of Financial Planning Hawaii, Inc., a state of Hawaii Registered Investment Adviser (CRD#153930). John H. Robinson is the sole owner and founder of Financial Planning Hawaii, Inc. Both John H. Robinson and Sue Gabor also maintain separate broker-dealer and investment advisory relationships with J.W. Cole Financial, a FINRA member broker-dealer, and J.W. Cole Advisors, an SEC-Registered Investment Adviser. Financial Planning Hawaii and J.W.Cole Financial/Advisors are unaffiliated entities. Services provided under Financial Planning Hawaii’s fee-only planning agreement are entirely separate from the financial planning and wealth management services provided under their unaffiliated registered representative and investment adviser representative relationships with J.W. Cole. Fee-only planning clients will NOT be solicited to establish investment accounts through J.W. Cole Financial or J.W. Cole Advisors. Clients who sign Financial Planning Hawaii’s fee-only planning agreement should understand that ongoing portfolio management is NOT part of the agreement.

Both John H. Robinson and Sue Gabor maintain state of Hawaii insurance producer licenses. However, while insurance risk management is included in the financial planning review process, no specific insurance products will be recommended or solicited as per the terms of the fee-only planning agreement.

All prospective clients are encouraged to review John H. Robinson’s and Sue Gabor’s professional and regulatory disclosure histories on the Securities Exchange Commission Investment Adviser Public Disclosure website (SEC IAPD) at https://adviserinfo.sec.gov/
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