I-Bond Composite Rate Estimated at 6.06%

With the new CPI index numbers released today, Ed from the Bogleheads forum has computed that

the new composite rate for I Bonds purchased between now and April 30 is 6.06%. The current composite rate is 4.28%.

As Mel noted, this is huge compared to

2.5% Prime MM
4.2% ST Bond
4.25% Total Bond Market

Considering they’re risk-free, tax-deferred, free from state and local taxation, and can possibly be used tax-free for qualifying education expenses, I Bonds look like a no-brainer at the current 1.2% real. Of course, that 1.2% fixed is most likely not going to be available come May 1st, so I suggest folks load up on their allotment before the end of April.

The composite rates, with the various fixed rate bonds, are as follows:

Fixed Composite
3.60% 8.52%
3.40% 8.32%
3.30% 8.21%
3.00% 7.91%
2.00% 6.88%
1.60% 6.47%
1.40% 6.27%
1.30% 6.16%
1.20% 6.06%
1.10% 5.96%
1.00% 5.86%

The big question is what is the treasury going to do with the fixed rate from May 1? I suppose they can set it to zero and still get a “competitive” 4.86%. But I think 0% might not sound acceptable to the less financially inclined. I suspect the fixed rate next month will be set to 0.2% to 0.5%.

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