Picking up Nickels

Friday, October 22, 2021

September 2021 CPI-U numbers released: Buy I Bonds Now!

The U.S. Bureau of Labor Statistics released the September 2021 Consumer Price Index (CPI-U) inflation data last week, which increased by 0.272% 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 2021 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 2021 (264.877) and September 2021 (274.310) (courtesy of inflationdata.com), we can calculate the variable rate for the second 6 month period for October 2021 issue I Bonds.

That means these bonds would earn the current rate of 3.54% (using 0% fixed & 1.77% variable) for the first 6 months and 7.12% (combined 0% fixed & 3.56% variable) for the second 6 months. In the current interest rate environment, an October I Bond purchase is VERY attractive when compared to something like the 12 month CD @ 0.80% APY special currently being offered at Lafayette Federal Credit Union. And, of course, waiting until November to buy will basically double your initial rate with the 7.12% offering.

With such market-beating rates, I really wouldn't discourage anyone from purchasing I Bonds in October or November. For what it's worth, I would buy in October to lock in the great 3.54% rate for the first six months before grabbing 7.12% for the second six months.


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