Picking up Nickels

Friday, April 13, 2018

March CPI-U numbers released: April 2018 issue I Bonds are compelling

The U.S. Bureau of Labor Statistics released the March 2018 Consumer Price Index (CPI-U) inflation data yesterday, which increased by 0.23% last month.

As always, now (along with the release of the September CPI-U) 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 April 2018 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 September 2017 (246.819) and March 2018 (249.554) (courtesy of inflationdata.com), we can calculate the variable rate for the second 6 month period for April 2018 issue I Bonds.

That means these bonds would earn a composite rate of 2.58% (using 0.1% fixed & 1.24 variable) for the first 6 months and 2.32% (using 0.1% fixed & 1.11% variable) for the second 6 months. Based on this, April 2018 issue I Bonds are worth considering when compared to something like the 12 month CD @ 2.25% APY currently being offered by My eBanc.

I personally maxed out my 2018 annual I Bond allotment in January and have elected to take the bulk of my 2017 Federal tax refund in the form of April 2018 issue paper I Bonds, so I'm personally out of ammo at this point.


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