Friday, April 13, 2012

Numbers Are In - You Can Get 2.7% Risk Free For 1 Year Money

Buy I Bonds Before The End Of April To Lock In More Than Double Equivalent CD Yields

As I detailed in an earlier post (, I bonds offered through offer a tax deferred yield that beats the pants off why you can earn on a 1 year CD.  With the release of the March consumer price index (CPI) data this morning (, we now know that the CPI rose 2.7% over the last twelve months.  Newsflash: inflation is way above currently available CD rates (about1%), even before taxes.  Because I bonds pay interest currently equal to the CPI, you can buy up to $10,000 per person (husband, wife, kids, etc.) in these bonds annually and shift low yielding savings to more generous I bond rates.  In addition to keeping up with inflation automatically, I bonds are tax deferred until you cash them in.  For more details, read my earlier post linked above.  But if you want to grab a 2.7% yield over the next year, don't procrastinate.  You only have until the end of April to lock in this yield.  If you wait until May you will get a bit over 2% for the first six months and an as yet undetermined rate (possibly as low as zero) the next 6 months.

As always, do your own due diligence, consult your advisor, and be careful.  Please do not consider the above as investment advice.  Note that I bonds cannot be surrendered before 1 year and carry a penalty of 3 months' interest if you surrender them before 5 years have passed.

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