New iBond rate 1.68%

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jhogue
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Re: New iBond rate 1.68%

Post by jhogue » Thu Jan 07, 2021 9:53 am

boglerdude wrote:
Wed Jan 06, 2021 7:20 pm
Why is my ibond puchased 04-01-2019 at 1.56%. Shouldnt it be the same 1.68% as the bond purchased last week
Not sure where you got your information. An I-bond purchased from November 2018 through April 2019 has a current composite rate of 2.18%. See TreasuryDirect's official table located at:

https://www.treasurydirect.gov/indiv/re ... positerate

Note that if you cash that I bond before it is 5 years old, you will pay a penalty of the 3 previous months interest, which will reduce your effective yield.
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
barrett
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Re: New iBond rate 1.68%

Post by barrett » Thu Jan 07, 2021 11:09 am

boglerdude wrote:
Wed Jan 06, 2021 7:20 pm
Why is my ibond puchased 04-01-2019 at 1.56%. Shouldnt it be the same 1.68% as the bond purchased last week

I have wondered the same thing about some bonds in our inventory. According to the Treasury Direct online calculator, a couple of I-Bonds from 2007 are currently yielding 1.06% and a few from 2010 are yielding 1.26%.

Wouldn't this only make sense if some I-Bonds were issued with a negative fixed rate?

ETA: This issue "goes away" if I set the calculation date to 4/1/21. So it's likely that bonds that were set with an original inflation rate of less than 1.68% don't instantly start paying 1.68%... or something like that.
boglerdude
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Re: New iBond rate 1.68%

Post by boglerdude » Sat Jan 09, 2021 10:26 pm

jhogue wrote:
Thu Jan 07, 2021 9:53 am
boglerdude wrote:
Wed Jan 06, 2021 7:20 pm
Why is my ibond puchased 04-01-2019 at 1.56%. Shouldnt it be the same 1.68% as the bond purchased last week
Not sure where you got your information. An I-bond purchased from November 2018 through April 2019 has a current composite rate of 2.18%. See TreasuryDirect's official table located at:

https://www.treasurydirect.gov/indiv/re ... positerate
Screencaps from my account. Should I email them?
ibonds-rate.png
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barrett
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Re: New iBond rate 1.68%

Post by barrett » Sun Jan 10, 2021 9:33 am

boglerdude wrote:
Wed Jan 06, 2021 7:20 pm
Why is my ibond puchased 04-01-2019 at 1.56%. Shouldnt it be the same 1.68% as the bond purchased last week
On the TD website, if you set the "Value as of" date for that 4/1/2019 bond to 4/1/2021, what do you then see for the yield?

For I-Bonds that I purchased on 10/1/2010, I am seeing the current yield as 1.26%. When I set the "Value as of" date to 4/1/2021, that jumps to 1.88%. So my 10/1/2010 bonds have a fixed rate of .2% plus the current inflation kicker of 1.68%.

To be clear, I am not saying that I understand WHY the interest rate only adjusts upward at six months intervals. But that does seem to be what happens.

jhogue???
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Re: New iBond rate 1.68%

Post by boglerdude » Sat Jan 16, 2021 10:37 pm

"I-bonds reset on their anniversary. The rate will update in April to 2.18%, and then be in effect through September."

https://www.bogleheads.org/forum/viewto ... &p=5732240
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