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 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