Last year, one of the hottest investment topics was I-Bonds, or Series I Savings Bonds, which are a type of US government bond designed to protect investors against inflation. In October 2022, the yield on the I-Bonds was 9.62% and hordes of investors crashed the Treasury.gov site trying to lock in the highest rate the bonds paid in its history.
On October 28th, the deadline to lock in the 9.62% rate, the Treasury sold $979 million of I-Bonds. A robust yield combined with the guarantee of the US government made the bonds a hot commodity.
Should you sell your I-Bonds?
Given that inflation has come down over the past year, the I-bond inflation rate through October 2023 dropped to just 3.38% – a far cry from the previous levels.
If you bought I-Bonds for the big yield, you're probably wondering, “When should I cash out of my I-Bonds?”
If you have owned the bond for 12 months or more, then you can redeem the bonds, but if you cash in the bond in less than 5 years, you lose the last 3 months of interest.
Either way, it is probably a good idea to sell if you don't expect inflation to pick up.
With 1-year Treasury yields at 5.4%, you can get a better return and the Treasury bills can be sold without any restrictions and loss of interest.
Did you purchase I-Bonds? Are you planning to sell?
Feature image from Unsplash