Last chance to keep my bond sky high before it falls back to Earth in November

Sky-high rates on my bond fall back to earth in November

Sky-high rates on my bond fall back to earth in November

Investors have until the end of the month to lock in interest near 10% on US Treasuries Savings Bond Phase I before the current record high rate – actually higher than the inflation rate – drops.

The current yield on Series I savings bonds is 9.62%, which was offered at the last six-month auction in May and is the highest rate the bonds have paid since they were introduced. in 1998.

Consider working with a financial advisor when you look for a high rate of return on the fixed income portion of your portfolio.

How Series I Savings Bonds Work

Series I bonds pay a fixed rate fixed by the Treasury as well as an additional rate of inflation, Consumer price index for all urban consumers (CPI-U), adjusted with each auction. Investors can purchase up to $10,000 of bonds each year electronically from the government Treasury website. Additionally, you can purchase up to $5,000 more in paper I bonds using your federal income tax refund, meaning you can buy up to $15,000 in I bonds each year. You can buy them in any denomination you choose.

To receive the full interest rate, the buyer needs to hold the bond for at least five years. Bonds cannot be redeemed for one year after purchase, and any bonds redeemed before five years will forfeit the final three-month interest payment.

Profit from bonds credited to the value of the bond, rather than being paid directly to the bondholder. Interest is tax-free at the state and local levels but taxed on your federal income tax return. Taxes may be paid when the bond is redeemed or when interest is credited over the life of the bond. Bonds sold to pay qualified educational expenses may be tax-exempt.

The bond has a maturity of 20 years with an additional 10 years, for a maturity of 30 years, with a compound interest rate that changes every six months as inflationary part is recalculated. However, the bond’s fixed rate potion will be locked for life. In 1998, the bond’s fixed rate of interest was set at 3.4%, meaning that savers who held that bond would receive an annual interest rate of 13.02%, paid payable on the first day of each month.

How to buy my bonds

Sky-high rates on my bond fall back to earth in November

Sky-high rates on my bond fall back to earth in November

I can only buy bonds from Treasury Buyers need to create an account, a process that many investors have criticized as complicated and clunky. Besides your personal information, you’ll need to enter your bank account and routing number, along with setting up a password and security question. The bonds are issued electronically and the minimum purchase amount is $25.

Investors can purchase an additional $5,000 in paper bonds using their federal income tax refund or $10,000 for a married couple filing jointly. Purchases can only be made when you submit a return, using IRS Form 8888Refund Allocation.

Bonds I can be purchased for children by setting up a “mini account” linked from the buyer’s own direct Treasury account. This account is a custodian account and can only be accessed by the buyer. My Bonds can also be purchased as a gift to anyone who has Social Security number, as long as the total amount of bonds purchased and credited to that Social Security number is less than $10,000 that year.

What really happened on November 1st?

The rate for the upcoming November 1 auction is expected to be around 6.5%, a rate still better than the best bank savings accounts or certificates of deposit. The interest on my bonds is compounded semiannually.

That rate could go higher if Treasury Secretary Janet Yellen decides to adjust the fixed-rate component, which has been zero since the start of 2020, when the Federal Reserve’s fund rate was at zero. % to 0.25%. That rate is currently 3% to 3.25%. The Treasury recommends buying bonds by October 28 to ensure that they are issued by October 31.


Sky-high rates on my bond fall back to earth in November

Sky-high rates on my bond fall back to earth in November

The clock is ticking on one of the safest and most generous fixed-income securities in the world, the US Treasury Series I savings bonds. These bonds are currently offering a record high yield of 9.62% – well above the current CPI-U. However, that rate is poised to fall, so if you want to get there, it’s important to act before November 1, 2022.

Tips on fixed-income securities

  • A financial advisor can help you choose fixed-income securities that complement your investment goals, schedule, and risk profile. Finding a financial advisor is not difficult. SmartAsset’s free tool Match you with up to three financial advisors serving your area, and you can interview your advisor matches for free to decide which is right for you. If you are ready to find an advisor who can help you achieve your financial goals, start right now.

  • Use our free investment calculator to get a quick estimate of how your investments might grow over time.

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Post Last chance to keep my bond sky high before it falls back to Earth in November appeared first on SmartAsset Blog.


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