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I-Bond Rate Update

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    I-Bond Rate Update

    I realized that it's 1 November again, and thus time for the semiannual I-Bond rate adjustment.

    ::drumroll::

    Fixed Rate: 0.1% (up from 0.0%)
    Inflation Rate: 1.24% (up from 0.98%)
    Composite Rate: 2.58% (up from 1.96%)

    I've been hanging on to $11.5k in my cash EF (an Ally savings account, currently earning 1.2%) for the last couple years, intending to eventually buy more I-Bonds with it... But the 0% fixed rate has dissuaded me for completely irrational reasons (the I-Bond composite rate has almost always been higher than the interest rate at Ally). Even though 0.1% fixed is nothing to write home about, earning double the interest is probably worth getting over the mental block, bite the bullet, and just go through with the buy.

    The order is in! It'll take my $35k EF to being 95% held in I-Bonds, which has been my eventual goal for quite a while. Only this new $10k I-bond will be within the 1-year holding period, and only my previous $10k I-bond (from 2014) is within the 5-year penalty period....so $15k is still available at any time with no penalty (though I've never had to tap my EF in the 11 years that I've had one).

    I almost bought this new I-Bond in 2016, when the fixed rate last rose from 0.0% to 0.1% ... dummy me didn't, missing out on the higher inflation-adjusted interest for the last 1.5-2 years. Only reason I waited was because I knew we were moving up here to Alaska, and I was preserving cash availability for what I knew would end up being a large DP on our home up here. Oh well... Lesson learned once again: "Don't try to time the market -- just hurry up & get your money invested already!"

    As a side discussion... I was surprised to realize that the rates have been rather spastic lately, bouncing up and down since 2014. Since Nov'14, the composite rates have been:
    1.48% -- November 1, 2014
    0.00% -- May 1, 2015
    1.64% -- November 1, 2015
    0.26% -- May 1, 2016
    2.76% -- November 1, 2016
    1.96% -- May 1, 2017
    2.58% -- November 1, 2017
    I almost wonder if it would be better for I-Bonds to adjust their rates on a quarterly basis, versus semiannually. It would definitely help them to track inflation more accurately. But then, maybe the economy is just dazed & confused, trying to figure out which way is up.... Go home, economy -- you're drunk!
    "Praestantia per minutus" ... "Acta non verba"
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