Tuesday, June 03, 2008

Treasury I-Bond rate at 4.84%

Back in mid-April I noted that the six-month inflation rate to be used for calculating the rate of return for the U.S. Treasury I-Bond for the May 2008 to November 2008 period appeared to be running at 2.42% and that the I-bond rate could reach 6%. I was dead-on for the inflation rate (meaning that I read the same tables that Treasury would be reading), but Treasury literally blew people away by lowering the fixed rate portion of the overall rate from 1.20% to 0.00%! Still, the new rate for new I-Bonds works out to 4.84%, which is better than just about everything else around at a comparable level of risk and liquidity. But, if you had purchased an I-Bond in the six months before May (such as in April when I wrote that post), you would still have the old fixed rate or 1.20%, giving you a current rate of 6.07%!

Read it and weep. But don't weep or wring your hand too much since you can only purchase $5,000 of I-Bonds per calendar year.

Still, it does show that there are some decent investment choices for the proverbial "little guy" without the need to get your hands dirty dealing with the so-called professionals of Wall Street.

Reread my April post for more details about U.S. Treasury I-Bonds.

-- Jack Krupansky


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