quote:

Originally posted by muzzleloader:
Will be dropping 10,000 of our emergency funds into I-bonds after the new rate comes in. It’d be 20, but the wife wants the money eroding in the bank

quote:

Originally posted by RogueJSK:
I misspoke. Projections for I Bonds' new rate is 9.62%, based on CPI numbers... The 8.37% is the composite APR between the current 7.12% and the new 9.62% rate.


It's best not to wait until May. Do it before April 30th.

Thank you for that explanation, I will go ahead and get it started.

It's a bit hard to visualize, but I Bonds variable rates don't work like traditional interest rates, where it pay to wait until the "better" interest rate is available and then "lock it in". The way I Bonds work, the variable interest rate changes every May and every November, based on inflation. But you get the full 6 month term of variable interest, no matter when you buy in during a rate period, followed by a full 6 months of the following rate, and the full 6 months of the following rate, and so on.

So if you buy I Bonds now in April 2022, you'll get the current 3.56% rate (7.12% APR) for the next 6 months through October 2022, and then May's new 4.81% rate (9.62% APR) for the next 6 months from October 2022 through April 2023.

So you'd get a full 6 months of the current 7.12% APR, as well as still the full 6 month of the new 9.62% APR.

Then if the variable rate drops at the next rate announcement in November 2022, you're still locked in at the higher APR until next April 2023. And if the variable rate goes up further in November 2022, you still get to take advantage of that new higher rate for a full 6 months from April 2023-October 2023.

So you're not missing out on anything by buying them now, rather than waiting until next month, since you still get to access May's higher rate for a full 6 month term. And you're giving yourself a 5 month leg up on a future rate decline, during which your I Bonds will continue to earn the better rate.


Plus, as previously mentioned, I Bonds are backdated to the 1st of the month during which they're purchased. So you can buy them on the last business day of April 29th, and still get credit for all of April's interest from April 1st. (But definitely buy them online before the last business day, since the gov often takes a day or two to process the order.)

So it's better to go ahead and create a Treasury Direct Account, and sock away that $10k before the end of the month.