September 2017 CPI-U numbers released: November 2017 I Bonds are a buy!
The U.S. Bureau of Labor Statistics released the September 2017 Consumer Price Index (CPI-U) inflation data last week, which increased by 0.53% over the past month.
As always, now is one of the best times to consider purchasing I Bonds. The reason for this is that we now know what the rate of return for October 2017 I Bonds will be for both the first and second six month periods, which is important since I Bonds must be held for 12 months before they can be redeemed.
Using the CPI-U data from March 2017 (243.801) and September 2017 (246.819) (courtesy of inflationdata.com), we can calculate the variable rate for the second 6 month period for October 2017 issue I Bonds.
That means these bonds would earn the current rate of 1.96% (using 0% fixed & 0.98% variable) for the first 6 months and 2.48% (combined 0% fixed & 1.24% variable) for the second 6 months. IMO, the current 1.96% rate makes it a toss up when it comes to deciding on an October vs. November purchase. You can either buy now and lock in the known attractive rates for twelve months, or you can hold off until November and hope that the fixed portion rises from the 0% currently offered. Either option is attractive when compared to short term investments like the 1 year CD @ 1.65% APY currently being offered at The First State Bank.
I already maxed out my 2017 purchase limit in January, so I'm only an observer at the moment. However, I will likely be buying in January 2018 due to the 2.48% (minimum) rate that will be available to me next year.
As always, now is one of the best times to consider purchasing I Bonds. The reason for this is that we now know what the rate of return for October 2017 I Bonds will be for both the first and second six month periods, which is important since I Bonds must be held for 12 months before they can be redeemed.
Using the CPI-U data from March 2017 (243.801) and September 2017 (246.819) (courtesy of inflationdata.com), we can calculate the variable rate for the second 6 month period for October 2017 issue I Bonds.
That means these bonds would earn the current rate of 1.96% (using 0% fixed & 0.98% variable) for the first 6 months and 2.48% (combined 0% fixed & 1.24% variable) for the second 6 months. IMO, the current 1.96% rate makes it a toss up when it comes to deciding on an October vs. November purchase. You can either buy now and lock in the known attractive rates for twelve months, or you can hold off until November and hope that the fixed portion rises from the 0% currently offered. Either option is attractive when compared to short term investments like the 1 year CD @ 1.65% APY currently being offered at The First State Bank.
I already maxed out my 2017 purchase limit in January, so I'm only an observer at the moment. However, I will likely be buying in January 2018 due to the 2.48% (minimum) rate that will be available to me next year.
posted by Frugal Frugalson at
1:59 PM
0 Comments:
Post a Comment
<< Home