I am buying in April. A lot of you will disagree. There is no wrong answer.
By David Enna, Tipswatch.com
Let’s take a moment to ponder what happened in March: The United States went to war in the Mideast, gas prices surged higher, the stock market fell into chaos (briefly) and U.S. inflation took a huge leap higher.
Way down on our list of concerns was: What’s going to happen to Series I Savings Bonds at the May 1 rate reset? On February 27, I would have confidently told you:
- The variable rate was going to fall to about 2.0% from the current 3.12%.
- The fixed rate was going to fall to 0.8% from the current 0.9%.
- And the composite rate would fall (for I Bonds purchased from May to October) to about 2.81%, down from the current 4.03%.
Wrong. Wrong. Wrong.
But before we get into that, let’s look at …
I Bond basics
I Bonds are U.S. government savings bonds designed to protect your savings from inflation. They offer a combination of interest rates that adjust for inflation, making them a popular choice for conservative investors.
- The fixed rate of an I Bond will never change. Purchases through April 30, 2026, will have a fixed rate of 0.90%, which means the return will exceed official U.S. inflation by 0.9% until the I Bond is redeemed or matures in 30 years. The fixed rate will reset on May 1.
- The inflation-adjusted rate (often called the I Bond’s variable rate) changes each six months to reflect the running rate of inflation. That rate is currently 3.12%, annualized, for six months. It will adjust again on May 1, 2026, rolling into effect for all I Bonds, no matter when they were purchased.
- The current composite rate is 4.03% annualized for six months for purchases through April 2026.
I Bonds are an extremely safe and conservative investment. Interest accrues monthly and principal can never decline, even in times of deflation. Investments are limited to $10,000 per person per calendar year for electronic I Bonds held at TreasuryDirect. There is also a “gift box” strategy some investors use to stack purchases for future years.
I Bonds have many positives. For example, earnings are free of state income taxes and federal taxes can be deferred until the I Bond is redeemed or matures. Also, I Bonds are a simple investment to buy and track, much simpler than a TIPS with a constantly changing market value and inflation accruals that update daily.
The variable rate
This is set in stone: Because of March’s lofty inflation, the I Bond’s inflation-adjusted variable rate will rise from the current 3.12% to a new rate of 3.34%. This is based on non-seasonally adjusted inflation for the months of October 2025 to March 2026, an increase of 1.67%. The I Bond’s rate-setting formula doubles the six-month inflation rate to create the new variable rate.
All I Bonds, no matter when they were issued, will eventually get the variable rate of 3.34% for six months, with the starting month depending on the original purchase month. From TreasuryDirect:
It’s important to remember that the new variable rate will apply to all I Bonds ever issued (no I Bonds have yet matured). A purchase in April will get that new, higher variable rate starting in October.
Conclusion: The I Bond’s variable rate will rise to 3.34% at the May 1 reset.
The fixed rate
The Treasury has no legal requirement or public formula for setting the I Bond’s fixed rate. The decision is at “the discretion of the Treasury Secretary.” However, we know Treasury tracks trends in real yields and adjusts accordingly. This forecasting formula has worked for the last decade: Take the average real yield of the 5-year TIPS over the preceding six months and apply a ratio of 0.65.
For this reset, we are interested in 5-year real yields from November 2025 to April 2026. There are only 13 market days left before the reset, so we can now get a solid projection:
The formula, which has been accurate for a decade, projects that the fixed rate will remain at the current level, 0.9%. That would be true even if the 5-year real yield — currently at 1.36% — suddenly plummeted to an average of 1.10% for the next 13 market days.
However … This projection is based on 10 years of Treasury history in setting the I Bond’s fixed rate. But the Treasury could change course at any time and we should be aware of that. President Trump’s first-term Treasury followed the formula and has continued to do so in his second term.
Conclusion. It looks highly likely that the I Bond’s fixed rate will hold at 0.90%.
Composite rate
If we assume the fixed rate holds at 0.90% and the variable rate rises to 3.34%, we are looking at a new composite rate of 4.26%, up from the current 4.03%, for I Bonds purchased from May to October 2026. This is based on the formula the Treasury uses to calculate the composite rate:
[Fixed rate + (2 x semiannual inflation rate) + (fixed rate x semiannual inflation rate)]
If I did my math right, this formula results in the composite rate of 4.26%.
This same annualized composite rate, 4.26%, will apply to I Bonds purchased in April, after six months of earning the current rate of 4.03%.
So we know that an investor purchasing in April will earn 4.03% for six months and then 4.26% for six months, earning a combined rate of 4.16%. An investor purchasing any time from May to October will earn 4.26% for the first six months and then an undetermined rate for the next six months.
Conclusion. The I Bond’s composite rate will rise to 4.26% at the May 1 reset.
The buying decision
Buy now. As I noted at the top, I will buy my full allocation of I Bonds ($10,000 per person per year) later in April. With that decision, I know I will earn 4.16% over the next 12 months, while retaining the permanent 0.90% fixed rate. This is the “sure thing” decision, and I happen to have cash available to make the purchase.
If you are buying in April, I recommend setting the purchase date no later than April 28 on TreasuryDirect to make sure it gets processed ahead of the rate shift.
Buy later. Buying in May would be fine, but most investors who don’t buy in April will hold off investing until at least October 14, when the September inflation report is released and sets the next variable rate, to be reset November 1. At that point investors will also have a very good idea of the next fixed rate.
If you think the fixed rate could be rising in November, it makes sense to wait. Using our standard formula, the 5-year average real yield would need to rise to 1.47% over the next six months to boost the fixed rate to 1.0%. That isn’t unreasonable. So waiting could make sense.
One thing to consider is that the fixed rate announced in November will be available for purchases through April 2027, when the purchase cap resets. Also, realize that a 10-basis-point increase in the fixed rate amounts to $10 a year on a $10,000 investment. It’s not life changing.
Risks of buying now. The fixed rate soars higher in November and you feel miserable about your impatient purchase. (Not likely, but anything can happen.)
Risks of buying later. The biggest risk (also slim) is that the Treasury tosses out its traditional rate-setting formula and drops the I Bond’s fixed rate at the May reset. Another more possible risk, but not as important financially, is that inflation will plummet from April to September and the November variable rate is lower than the current 3.12%.
Short-term investment?
A combined composite rate of 4.16% looks attractive when you compare it to the nominal yields of a 4-week (3.67%) or 1-year (3.70%) T-bill. But remember that you have to hold an I Bond for one year and if you redeem at that point you lose the latest three months of interest.
Not worth it. If you buy late in April and then redeem in April 2027, you will lose the last three months of interest, meaning your total return would be 3.08%. You can do better buying a 1-year T-bill.
Rolling over I Bonds
If you are holding I Bonds with 0.0% fixed rates, you are currently earning a composite rate of 3.12%, and that will rise to 3.34% when the new variable rate kicks in. That’s not bad. There’s no reason to rush to sell these, but if you need to raise cash to purchase 0.90% I Bonds, redeeming and repurchasing makes sense.
I generally encourage people to continue holding I Bonds “until you need the cash.” It’s great to have these savings bonds growing tax-deferred with zero risk.
If you do a roll over, you will owe federal income taxes on the interest earned, and if your withdrawal is more than $10,000 (because of earned interest) you’ll only be able to buy $10,000 in new I Bonds in 2026. Also, time your redemption for early in the month because you earn no interest in the month of redemption.
Gift-box strategy
I don’t think there is a compelling need to “load up” on I Bonds in 2026, but that might change later in the year if the fixed rate surges higher. Although I have used it, I am not a fan of the gift-box strategy, mainly because the Treasury has made no attempt to clarify the rules and in fact has muddied the waters.
Conclusion
When should you purchase? There is no wrong answer. Buying in April or later in the year will likely generate similar financial returns. Getting an I Bond with a fixed rate of 0.90% remains attractive. This is a personal decision, but I still encourage investing in I Bonds as an inflation-adjusted, tax-deferred store of cash.
What are your investment plans? Discuss in the comments section!
• Confused by I Bonds? Read my Q&A on I Bonds
• Let’s ‘try’ to clarify how an I Bond’s interest is calculated
• Inflation and I Bonds: Track the variable rate changes
• I Bonds: Here’s a simple way to track current value
• I Bond Manifesto: How this investment can work as an emergency fund
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David Enna is a financial journalist, not a financial adviser. He is not selling or profiting from any investment discussed. I Bonds and TIPS are not “get rich” investments; they are best used for capital preservation and inflation protection. They can be purchased through the Treasury or other providers without fees, commissions or carrying charges. Please do your own research before investing.
Treasury Inflation-Protected Securities 
Fantastic! As I’m still young, I prefer to defer purchases as long as I can. Given I can wait until October (or November) to make a purchase, that’s what I’ll do to best try to maximize my blended fixed rate over my growing I-Bond Portfolio.
Pip pip!
If you are selling before the 5 year period, the best month to sell can often be in April. You will lose Feb, Mar, Apr interests – and these are calculated on a daily tally. This is the shortest 3 month period of the year. For this year it looks like those could also be the lowest interest rate months for 2026, but a lot depends on what month your iBond interest rate changes.
You said, “If you are selling before the 5 year period, the best month to sell can often be in April. You will lose Feb, Mar, Apr interests”.
If you sell before the end of a month, you lose that month plus the 3 prior months interest. The April interest is posted on May 1st, so in your example you would want to sell the 1st of May to lose Feb, Mar & Apr interest.
In years past I might have waited until May just to lock in the higher variable rate sooner or until November, thinking that inflation has to get worse and it would be worth grabbing the higher fixed rate at that time. But these days, long established norms seem to be easily replaced at whim without explanation or consequence. I’d hate to learn next month that Treasury has suddenly changed their usual and accepted practices surrounding I Bonds. My current thinking is to take my allotment before the end of the month.
What is your prediction for ibond rates (fixed and variable) for November and beyond should inflation continue to rise due to ongoing energy shortages.
It’s impossible to say. I would expect a short-term boost in inflation. I could see the annual rate reaching 4% in coming months, but beyond that everything is uncertain.
Did we miss…buy in April 2026 and have the option (also) in selling 15 months later when the 3 month penalty may be minimal or continue to hold?
If you redeem anytime before 5 years, you will lose that last three months of interest. But it is possible to time the move after three months of a low variable rate. So it is possible that would work after 15 months.
This is helpful. Because my wife and I each have Treasury Direct accounts, I think one of us will buy in April and one in May. Time diversification over the long run, isn’t it? Thanks for the advice.
Is there any more clarity from Treasury about their plans for this program?
I rolled over my 0% fixed rate I Bond to 1.3% but I still have another with 0.4% from 1/23. What would you recommend?
Opinion: In this case, it would depend of if you can raise the money easily for a new I Bond purchase. I still have some 0.2%, 0.3% and 0.4% I Bonds that I haven’t rolled over. Your 0.4% version (January 2023) is currently paying 3.53% and will transition to something like 3.76% at the next reset. Not bad in today’s market.
I’m glad you included this cautionary note:
Not worth it. If you buy late in April and then redeem in April 2027, you will lose the last three months of interest, meaning your total return would be 3.08%. You can do better buying a 1-year T-bill.
It illustrates the yield impact of the three month penalty for anyone thinking that today’s I Bond is a short term play. Perhaps it was back a few years ago when Inflation spiked the rate over 9%, but not now.
The real wild card in making this decision is the Iran War and the rise in oil prices above $100 per barrel due to the closing of the Strait of Hormuz. One point worth noting is the timing of the oil inflation happened to coincide with the last month of an I Bond 6-month rate change period. Had it been delayed just ome more month, the likelihood of a much higher rate in the May to October period would have resulted. As it turned out, the spike in inflation will end up smoothing out between the two 6-month periods this year. And as you’ve pointed out, nine of this matters as much as a successful and speedy conclusion to the conflict.
Looking ahead, which is always a crap shoot, it seems likely the impact of constrained oil supplies will continue to spike inflation which will permeate into shipping costs and other industries sensitive to oil prices such as airlines and shipping costs which impact many items including food. I don’t see much risk in buying an I Bond in April. You can always buy the next one in 2027 before April if it is more attractive. So the answer to the question of when to buy might very well be both, buy now and later, not now or later.
Good points, thanks. The I Bond rate-setting periods are designed to include a mix of late-year and early-year months, to smooth out the effect of variations in non-seasonally adjusted inflation. It will be interesting to see what we get in the next six months.
marce, but if the new May 2027 inflation rate goes to zero one would not look at 12 month redemption but as noted before at 15 months (really only 14 since one buys in late April) the apr for 14 months (3months of zero penalty) would be higher?
The odds of a 0% inflation rate are highly unlikely bordering on preposterous, imo.
Good question. So far I have purchased 8,800 I-bonds this year. With the last 1,200, I could just get them now or Maybe wait until October to see if there are any positive surprises. I am thinking they have to have an exit ramp for Iran war, maybe that occurs in the next month and Inflation starts to go down. Even if it goes up, there is no problem buying now, you will eventually get the higher rate. The fixed rate is harder to predict. In 6 months it could go either way. I bought most of the 10K sooner to get the 5 year clock started, that is also relevant to decision. In the end it probably will not make a material difference whether you buy now or Oct / Nov.
David, I really appreciate your insights regarding IBonds. One thing I recently came up against was how selling I bonds can affect your taxes if you also have started your RMD. My first RMD was in 2025 when I turned 73. At the same time I realized that I had a bunch of I Bonds maturing in 2030. They are great, with a relatively high interest rate. I think the purchase price was 20K, while the current value was 100K. So 80K in income. With my pension, Social Security, etc., the RMD was already bringing me close to a different tax bracket (just 24% instead of 22%), it was also bringing me close to a higher IRMAA bracket–right now I pay no IRMAA. Luckily I realized this early enough to figure out a strategy. Sell some of the 2030 I Bonds each year so that by 2030 they are all gone. That should keep me in the same tax bracket and not trigger IRMAA. Hopefully I have figured it correctly.
This is a huge issue as the early-issue I Bonds with very high fixed rates are nearing maturity. I wrote about this in Feb 2024: https://tipswatch.com/2024/02/04/long-time-i-bond-investors-face-a-tax-time-bomb/
I have a load of I Bonds maturing in 2031 and I plan to redeem them (reluctantly) over the five years 2027 to 2031 to space out the tax and IRMAA effect.
I have a similar issue and listened to your story. I have 2030 and 2033 maturities coming up. I began redemption of 25% of the 2030 tranche this year. I also have RMD’s starting in 2030 so I was trying to spread the pain. Thanks!
I sure wish I knew about I BONDS in “98” when I was 29 years old $$$
Thanks, David! I’m not buying right now but will consider later this year if the fixed rate rises. I have a ton more bonds than I ever imagined (all TIPS and I-bonds) thanks to your columns. Still have lots of cash, which I have to work to get the best short term rates on.