In 2022 I bonds were the rage. They were mentioned daily on financial news stations, business sections and recommended to many of our clients throughout the year. What a difference a year makes. Last year saw the I bond interest rate hit a peak of 9.62%, then reset to 6.89%, and this May it dropped again to 4.3% (the interest rate on these types of government bonds reset every May and November). We see no reason to sell existing I bonds as redeeming these bonds within five years of purchase means you give up the last three months of interest.
While investing in these today is not a bad strategy, there may be better alternatives. For example, as the date of this post we are seeing interest rates for FDIC insured brokered bank certificates of deposit (CD’s) as high as 5.1% for as short as 3 months. You can even find shorter duration Treasury Bills offering slightly higher yields.
There are many options for your cash sitting in low interest-bearing checking and savings accounts, please call us to discuss these in detail.