March CPI-U numbers released: Meh on April 2019 issue I Bonds
The U.S. Bureau of Labor Statistics released the March 2019 Consumer Price Index (CPI-U) inflation data last week, which increased by 0.56% 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 2019 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 2018 (252.439) and March 2019 (254.202) (courtesy of inflationdata.com), we can calculate the variable rate for the second 6 month period for April 2019 issue I Bonds.
That means these bonds would earn a composite rate of 2.83% (using 0.5% fixed & 1.16 variable) for the first 6 months and 1.90% (using 0.5% fixed & 0.70% variable) for the second 6 months. Based on this, April 2019 issue I Bonds are underwhelming when compared to something like the 12 month CD @ 2.85% APY currently being offered by Citizens Financial Group.
Due to the 0.5% fixed rate (the highest since November 2008), I personally maxed out my 2019 annual I Bond allotment in January while redeeming some older ones with a 0% fixed rate. I also elected to take the bulk of my 2018 Federal tax refund in the form of April 2019 issue paper I Bonds, so I'm already maxed out for this year.
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 2019 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 2018 (252.439) and March 2019 (254.202) (courtesy of inflationdata.com), we can calculate the variable rate for the second 6 month period for April 2019 issue I Bonds.
That means these bonds would earn a composite rate of 2.83% (using 0.5% fixed & 1.16 variable) for the first 6 months and 1.90% (using 0.5% fixed & 0.70% variable) for the second 6 months. Based on this, April 2019 issue I Bonds are underwhelming when compared to something like the 12 month CD @ 2.85% APY currently being offered by Citizens Financial Group.
Due to the 0.5% fixed rate (the highest since November 2008), I personally maxed out my 2019 annual I Bond allotment in January while redeeming some older ones with a 0% fixed rate. I also elected to take the bulk of my 2018 Federal tax refund in the form of April 2019 issue paper I Bonds, so I'm already maxed out for this year.
posted by Frugal Frugalson at
1:46 PM
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