The New I Bond Rate is More Attractive.

[dasari4kntr]

Sometimes it pays to procrastinate.

Individual investors rushed to purchase series I Treasury inflation-linked savings bonds last week, before a Friday deadline to get a 9.6% interest rate for the first six months.

There were record daily purchases of about $1 billion of I Bonds Friday and $7 billion for October. Investors were so eager to get the juicy rate that the TreasuryDirect website struggled under the traffic last week. Many people couldn’t access it.

 Yet the new rate structure for I Bonds actually is more attractive, even though the rate of 6.89% for the first six months, announced earlier Tuesday by the Treasury, is lower, Barron’s estimates.

 Why? Investors now will get a fixed rate of 0.4% annually in addition to an inflation adjustment, which gave people who bought the debt from May through October their 9.6% yield. Those buyers will get a fixed rate of zero for the life of the savings bond, plus the inflation adjustment, which is reset every six months based on the consumer price index.

The benefit of the 0.4% fixed rate will play out over time because I Bonds have a maturity of 30 years.   After about four years, current buyers should be ahead of those who bought bonds last week.

The new rate of 6.89% reflects the inflation component of 6.49% based on inflation from March to September plus the fixed rate of 0.4%.

https://www.barrons.com/articles/i-bond-bette-rate-november-51667329685?st=5u3y7qkhpg9r34b&noredirect=y

[quickgun_murugun]

40 minutes ago, dasari4kntr said:

Sometimes it pays to procrastinate.

Individual investors rushed to purchase series I Treasury inflation-linked savings bonds last week, before a Friday deadline to get a 9.6% interest rate for the first six months.

There were record daily purchases of about $1 billion of I Bonds Friday and $7 billion for October. Investors were so eager to get the juicy rate that the TreasuryDirect website struggled under the traffic last week. Many people couldn’t access it.

 Yet the new rate structure for I Bonds actually is more attractive, even though the rate of 6.89% for the first six months, announced earlier Tuesday by the Treasury, is lower, Barron’s estimates.

 Why? Investors now will get a fixed rate of 0.4% annually in addition to an inflation adjustment, which gave people who bought the debt from May through October their 9.6% yield. Those buyers will get a fixed rate of zero for the life of the savings bond, plus the inflation adjustment, which is reset every six months based on the consumer price index.

The benefit of the 0.4% fixed rate will play out over time because I Bonds have a maturity of 30 years.   After about four years, current buyers should be ahead of those who bought bonds last week.

The new rate of 6.89% reflects the inflation component of 6.49% based on inflation from March to September plus the fixed rate of 0.4%.

https://www.barrons.com/articles/i-bond-bette-rate-november-51667329685?st=5u3y7qkhpg9r34b&noredirect=y

Endi Ee lolli ? 

[dasari4kntr]

Just now, quickgun_murugun said:

Endi Ee lolli ? 

article…

[dasari4kntr]

2 minutes ago, quickgun_murugun said:

Endi Ee lolli ? 

ippativaraku fixed rate 0 vundi…chaal years tarvata 0.4% fixed rate ichhadu nov lo…adi matter..

[sarfaroshi]

I am very new to this…

so how will they benefit 6.89% kakunda additional .4% add avtu untunda ?

[dasari4kntr]

1 minute ago, sarfaroshi said:

I am very new to this…

so how will they benefit 6.89% kakunda additional .4% add avtu untunda ?

yes…

fixed + floating…

fixed rate will be fixed for 30 years…

[Complex]

@dasari4kntruncle

how is it better, last week vallaki  first 6 months 9.6%  and then  ?

[dasari4kntr]

8 minutes ago, Complex said:

@dasari4kntruncle

how is it better, last week vallaki  first 6 months 9.6%  and then  ?

first of all both are better...

last week is 0% fixed rate + 9.6% floating rate..

this week is 0.4% fixed rate + 6.89% floating rate...

ee rate NOV nunchi MAY varaku vuntadi...in case if i am still interested ...next year before MAY i can buy this again...

 

once recission over and infalation came down after 3-4 years...these NOV guys get advantage than OCT guys..that advantage is 0.4%...

 

calculations from the treasury direct...

Here's how we got that rate:

Fixed rate	0.40%
Semiannual (1/2 year) inflation rate	3.24%
Composite rate formula: [Fixed rate + (2 x semiannual inflation rate) + (fixed rate x semiannual inflation rate)]	[0.0040 + (2 x 0.0324) + (0.0040 x 0.0324)]
Gives a composite rate of	[0.0040 + 0.0648 + 0.0001296]
Adding the parts gives	0.0689296
Rounding gives	0.0689
Turning the decimal number to a percentage gives a composite rate of	6.89%

 

[Complex]

9 minutes ago, dasari4kntr said:

first of all both are better...

last week is 0% fixed rate + 9.6% floating rate..

this week is 0.4% fixed rate + 6.89% floating rate...

ee rate NOV nunchi MAY varaku vuntadi...in case if i am still interested ...next year before MAY i can buy this again...

 

once recission over and infalation came down after 3-4 years...these NOV guys get advantage than OCT guys..that advantage is 0.4%...

 

calculations from the treasury direct...

Here's how we got that rate:

Fixed rate	0.40%
Semiannual (1/2 year) inflation rate	3.24%
Composite rate formula: [Fixed rate + (2 x semiannual inflation rate) + (fixed rate x semiannual inflation rate)]	[0.0040 + (2 x 0.0324) + (0.0040 x 0.0324)]
Gives a composite rate of	[0.0040 + 0.0648 + 0.0001296]
Adding the parts gives	0.0689296
Rounding gives	0.0689
Turning the decimal number to a percentage gives a composite rate of	6.89%

 

[dasari4kntr]

12 minutes ago, Complex said:

antha @Complex emi ledhu bro...

lets take last week scenario... 0% fixed + 9.6 % floating...

if you invest $10000 with that rate you will get $480 interest at sixth month..then it will be $10480...

and every six months interest is compounded and added to the principle...that means after six months you will get interest on $10480...based on that six months interest rate...

similarly...this NOV calculations also...

 

may be this barron article title is misleading...you...i posted this for few folks who bought this weekend..they are feeling lost some opportunity..just to convey them its ok...nothing to worry...

 

https://www.treasurydirect.gov/savings-bonds/i-bonds/

How does an I bond earn interest?	I savings bonds earn interest monthly. Interest is compounded semiannually, meaning that every 6 months we apply the bond’s interest rate to a new principal value. The new principal is the sum of the prior principal and the interest earned in the previous 6 months. Thus, your bond's value grows both because it earns interest and because the principal value gets bigger.

[Pahelwan2]

Dasari bro repu endi market assama with fed rate hike

[dasari4kntr]

Just now, Pahelwan2 said:

Dasari bro repu endi market assama with fed rate hike

ee roju aiindhi already...ade reason tho...

75 aa 50 aa ane daanni batti repati sangathi vundochhu...

 

[Pahelwan2]

4 minutes ago, dasari4kntr said:

ee roju aiindhi already...ade reason tho...

75 aa 50 aa ane daanni batti repati sangathi vundochhu...

 

50 no chance 75 or 100 ani quochan

[Telugodura456]

47 minutes ago, dasari4kntr said:

first of all both are better...

last week is 0% fixed rate + 9.6% floating rate..

this week is 0.4% fixed rate + 6.89% floating rate...

ee rate NOV nunchi MAY varaku vuntadi...in case if i am still interested ...next year before MAY i can buy this again...

 

once recission over and infalation came down after 3-4 years...these NOV guys get advantage than OCT guys..that advantage is 0.4%...

 

calculations from the treasury direct...

Here's how we got that rate:

Fixed rate	0.40%
Semiannual (1/2 year) inflation rate	3.24%
Composite rate formula: [Fixed rate + (2 x semiannual inflation rate) + (fixed rate x semiannual inflation rate)]	[0.0040 + (2 x 0.0324) + (0.0040 x 0.0324)]
Gives a composite rate of	[0.0040 + 0.0648 + 0.0001296]
Adding the parts gives	0.0689296
Rounding gives	0.0689
Turning the decimal number to a percentage gives a composite rate of	6.89%

 

so ee rates 30 years locked kaadha ?

[ARYA]

1 hour ago, dasari4kntr said:

Sometimes it pays to procrastinate.

Individual investors rushed to purchase series I Treasury inflation-linked savings bonds last week, before a Friday deadline to get a 9.6% interest rate for the first six months.

There were record daily purchases of about $1 billion of I Bonds Friday and $7 billion for October. Investors were so eager to get the juicy rate that the TreasuryDirect website struggled under the traffic last week. Many people couldn’t access it.

 Yet the new rate structure for I Bonds actually is more attractive, even though the rate of 6.89% for the first six months, announced earlier Tuesday by the Treasury, is lower, Barron’s estimates.

 Why? Investors now will get a fixed rate of 0.4% annually in addition to an inflation adjustment, which gave people who bought the debt from May through October their 9.6% yield. Those buyers will get a fixed rate of zero for the life of the savings bond, plus the inflation adjustment, which is reset every six months based on the consumer price index.

The benefit of the 0.4% fixed rate will play out over time because I Bonds have a maturity of 30 years.   After about four years, current buyers should be ahead of those who bought bonds last week.

The new rate of 6.89% reflects the inflation component of 6.49% based on inflation from March to September plus the fixed rate of 0.4%.

https://www.barrons.com/articles/i-bond-bette-rate-november-51667329685?st=5u3y7qkhpg9r34b&noredirect=y

Good to know uncle garu 👍