11

# Treasury Series I Savings Bond Rate Update (May 2013)

 by Jim Wang Email   Print

With the release of the March 2013 CPI-U figures, we now know the variable interest rate on Series I Savings Bonds for the next six months starting in May and it continues to be low (but it’s an increase from the last six months – so that’s good right?).

The March 2013 CPI-U figure was 232.773 and the September 2012 CPI-U figure was 231.407 so we can calculate a semi-annual increase of 0.590% and we’d expect the variable component of the bond to be 1.18%. The only question is whether there will be any change in the fixed rate, which currently sits at 0.0%. With interest rates so low, no one expects that to change anytime soon.

That said, using the equation:
Bond rate = Fixed rate + 2 x Semiannual inflation rate + (Semiannual inflation rate X Fixed rate)
Bond rate = 0 + 2 x 0.0059 + (0.0059 X 0)
Bond rate = 0.0118

So we’d expect the interest rate on Series I Savings bonds to be 1.18% in May.

### 11 Responses to “Treasury Series I Savings Bond Rate Update (May 2013)”

1. NateUVM says:

Jim, the semi-annual inflation rate from the last six months was 0.88%, resulting in an overall I-Bond rate of 1.76%. In both cases, the current figures (for the next six months) represent a decrease, but you referenced them as low, but an increase over the last six months.

Am I missing something, or was that a typo? I really want to be missing something… An increase would be welcome!!

2. Michael says:

Nate: The 0.88% is the old # from the *previous* six months. The Nov rate (current until end of month) was 1.76%. The new variable rate, starting the 1st of next month, will be 1.18%. I suspect he was referencing an increase in the CPI vs. an increase in the rate.

3. NateUVM says:

Michael, perhaps he meant that it’s “still” an increase, resulting in a positive rate for the I bonds…? Still, given that he’s specifically talking about the variable rate and that it was an increase over the previous 6 months, it’s anything but clear.

Was just hoping I was following the calc wrong (though, I am pretty sure I am not).

4. Shafi says:

About 20 years ago, I bought one Series EE bonds. We want to cash it in.

5. I remember receiving these from my grandparents growing up, although the rate was higher than they probably will be for some time.

No need to buy these bonds at these rates

7. Michael says:

admiral58: Depends. If you’re looking to build a significant position in I-Bonds due to the inflation protection then you need to buy them on an ongoing basis due to the annual purchase limits. Also, you could do a lot worse than a tax-advantaged 1.18% (free of state taxes, and tax-deferred [if not tax free] at the federal level).

8. Diversified Investor says:

Diversify, diversify, diversify – been off and on laddering I-bond since 2006. Inflation will eventually rise. If your investments are diversified, I-bonds can be a less risky way to hedge against inflation (Gold/Commodities can be another way if you really like taking risks). In addition to potential being free from state tax, if I-Bonds are utilized for qualifying educational expenses and you qualify, interest can tax exempt – Triple Bonus! Remember, it’s not what you make, but what you get to keep that matters…..invest smart, nor hard.

9. David M says:

Assuming the government is calculating inflation correctly/fairly – the interest fromt the inflations component does not matter. 2% inflation 2% return – 5% inflation 5% return – for a net 0 after inflation.

10. Diversified Investor says:

David M: Correct – Ibonds are less risky way to “hedge” or “protect” your purchasing power against inflation, not beat it.

11. David M says:

Diversified Ivestor – thanks for the reply.

Or beat it – if you purchased – years ago.

I purchased my I-Bonds in 2000 to 2003. My fixed rates – on top of the inflation rate – is 1.6% to 3.6%.

I’m holding this Bonds at least for a few more years and likely until they mature 30 years from the date of purchase!

Previous Article: «
Next Article: »
Advertising Disclosure: Bargaineering may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website.