I Bonds Offer Opportunity As A Short-Term Investment

Summary

  • A unique feature of I Bonds is that yields are set for six-month periods and won’t change. Investors can now lock in the current yield of 2.22% for six months.
  • Deflation is coming, but shouldn’t be reflected harshly in the I Bond’s next variable rate, to be reset on May 1 based on inflation from October 2019 to March 2020.
  • Ideally, I Bonds are a long-term investment, part of a strategy of building inflation-protected cash. But a short-term option now opens up.

With the Federal Reserve slashing its key short-term interest rate to nearly zero on March 15, investors are going to see their return on safe short-term investments fall to zero in coming months.

Say goodbye to Treasury Money Market Funds paying interest of 1.5% or higher. We may not see those rates again for many months, possibly years.

Read my full analysis on SeekingAlpha.com

I Bond yield estimates

About Tipswatch

Author of Tipswatch.com blog, David Enna is a long-time journalist based in Charlotte, N.C. A past winner of two Society of American Business Editors and Writers awards, he has written on real estate and home finance, and was a founding editor of The Charlotte Observer's website.
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