Some pretty poor news about the new I-Bond rates for May, 2009. The combined interest rate return from now through October is zero percent!
According to TreasuryDirect:
I Bond Earnings Rate 0.00%, Fixed Rate 0.10%
The earnings rate for Series I Savings Bonds is a combination of a fixed rate, which applies for the life of the bond, and the semiannual inflation rate. The 0.00% earnings rate for I bonds bought from May through October 2009 will apply for their first six months after issue. The earnings rate combines a 0.10% fixed rate of return with the -5.56% annualized rate of inflation as measured by the Consumer Price Index for all Urban Consumers (CPI-U). When the inflation rate is less than zero, a bond’s earnings rate is less than its fixed rate (but the earnings rate is never less than zero). The fixed rate applies for the 30-year life of I bonds purchased during this six-month period. The CPI-U decreased from 218.783 to 212.709 from September 2008 through March 2009, a six-month change of -2.78%.
The highest fixed rate of return for any previously issued I-Bond is 3.6%. Because the annualized rate of inflation is currently -5.56%, all previously issued I-Bonds will earn a zero percent total return for the next six months. Ouch!
While considered one of the safest investments available, and even with the reduced risk, would you invest in an I-Bond now? I don’t think so.
Comments 2
Unbelievable!! Here I am the nice quiet “saver” that stayed within my budgets & didn’t cause any of this mess. I did not lose any capital or savings in the last year – but I AM beginning to get ticked off about not being able to earn anything on my savings. My current plan is to take my money and give it to my kids before someone else gets their hands on it. I’m not parking it in a bank to let them indiscriminately lend it to a Ninja and pay me some piddly amount!!
Posted 07 May 2009 at 10:32 am ¶Hi Janice..
but I AM beginning to get ticked off about not being able to earn anything on my savings.
You’re just beginning? This whole financial crisis is about “responsible” people having to suffering the consequences for the actions of the “irresponsible”. I’ve been ticked off.
I bought my I-bonds in 1999 during a period of stock market euphoria, when their 3.4% fixed rate return seemed paltry.
During this whole recent financial mess, my I-bonds were the only portion of my portfolio actually making decent returns.
Now, perhaps because of possible I-bond design faults, and because the government didn’t anticipate this severe a crisis, even I-bond returns are going into the crapper.
It almost seems as though we’re being forced to invest in more riskier ventures.
Posted 07 May 2009 at 1:50 pm ¶Post a Comment