Series I Savings Bond Rate Update, November 2023

By admin

The United States
GPE

Treasury set a new interest rate for

Series
ORG

I

United States Savings
ORG

Bonds. From

November 1, 2023 through
DATE

April 30, 2024:

the fixed rate for new savings bond purchases is

1.30%
PERCENT

; and

; and the

semi-annual
DATE

, inflation-indexed rate is

1.97%
PERCENT

.

Series I Savings Bonds purchased

between now and April 30, 2024
DATE

will earn interest at an annualized rate of

5.27%
PERCENT

for

six months
DATE

following their purchase.

Series I Savings Bonds that you currently own will continue to earn interest at their base rate, plus the new inflation rate. For savings bonds purchased

between May 1, 2023 and
DATE


October 31,
DATE


2023
DATE

, that will be

4.86%
PERCENT

(

0.9%
PERCENT

fixed rate plus the new

1.97%
PERCENT

inflation rate). Series I bonds with a

0%
PERCENT

fixed rate will still accrue interest at a rate of

3.94%
PERCENT

for

the next six months
DATE

.

Inflation is up slightly, but a good fixed rate

Inflation is up slightly from the previous adjustment period. The inflation-indexed rate for bonds purchased

between May 1 and October 31
DATE

was

1.69%
PERCENT

. Now it’s closer to

2%
PERCENT

. That’s bad news for our spending. But it’s great for savings rates.

Although the inflation rate for I Bonds changes

every six months
DATE

, the base rate stays

the same over 30 years
DATE

. If the inflation-indexed rate spikes to

4.81%
PERCENT

as it did in

May of 2022
DATE

, bonds you purchase over

the next six months
DATE

could earn

close to 11%
PERCENT

. Of course, if we enter a period of deflation, your bonds could earn

1.3%
PERCENT

and nothing more.

Should you chase higher yields?

Series I Bonds offer an excellent hedge against inflation. That said, there are opportunities to earn a higher yield.

Bank of America Series L
ORG

(BAC-L) and

Wells Fargo Series L
ORG

(WFC-L) preferred shares have yields approaching

7%
PERCENT

. Shares of both are trading

between $1050
MONEY

and $

1100
MONEY

. (Read more about preferred shares.)

Looking for the security of a governmen-sponsored enterprise?

Federal Home Loan Mortgage Corporation
ORG

(

Freddie Mac
ORG

) and

Federal Farm Credit Bank
ORG

bonds offer coupon rates over

6%
PERCENT

.

If you have a bit more risk tolerance, you might prefer

Fidelity
ORG

‘s Floating Rate High Income Fund (

FFRHX
ORG

). Its yield has exceeded

8%
PERCENT

for

the last couple of months
DATE

. Shares of

FFRHX
ORG

fluctuate

between $7 and $10
MONEY

each, so this is an easy fund to buy into.

FFRHX
ORG

also pays distributions

monthly
DATE

instead of

quarterly
DATE

or

semi-annually
DATE

.

There’s an advantage to sticking with Series I savings bonds, however: the interest compounds. That isn’t true for preferred shares or bonds. At least with exchange-traded funds like

FFRHX
ORG

, you can use distributions to buy new shares. But you’re taking on a bit more risk.

Should you cash in your existing

Series
EVENT

I bonds?

Maybe. Remember that if you redeem your savings bonds within

5 years
DATE

, you forfeit

3 months
DATE

of interest. You may also owe a little more at tax time. That said, I do think it’s a good time to redeem I bonds with a

0%
PERCENT

fixed rate and use the money to buy savings bonds with a higher fixed rate.

Disclaimer

As always, remember: I’m not a financial professional, I just read a lot. I also practice what I preach. Don’t be afraid to consult a financial advisor.