November 2009 to May 2010 I Bond Rates- 3.36% Total, Fixed Rate 0.30%

by RC on November 23, 2009

After a 6 month period (May 2009 to November 2009) where I bonds effectively earned a 0% rate of return for the period, the increase in the CPI-U from negative (deflationary) to positive (inflationary) pushed I bonds back into positive yield territory.

November 2008- I Bond Earnings Rate 3.36%, Fixed Rate 0.30%

The earnings rate for Series I Savings Bonds is a combination of a fixed rate, which applies for the life of the bond, and the semiannual inflation rate. The 3.36% earnings rate for I bonds bought from November 2009 through April 2010 will apply for their first six months after issue. The earnings rate combines a 0.30% fixed rate of return with the 3.06% annualized rate of inflation as measured by the Consumer Price Index for all Urban Consumers (CPI-U). The fixed rate applies for the 30-year life of I bonds purchased during this six-month period.

Here’s how the composite rate for I bonds issued November 2009 – April 2010 was set:

Fixed rate = 0.30%
Semiannual inflation rate = 1.53%

Composite rate = [Fixed rate + (2 x Semiannual inflation rate) + (Fixed rate x Semiannual inflation rate)]
Composite rate = 0.0030 + (2 x 0.0153) + ( 0.0030 x 0.0153)]
Composite rate = [ 0.0030 + 0.0306 + 0.0000459]
Composite rate = 0.0336459]
Composite rate = 0.0336
Composite rate = 3.36%

Since I bonds are tax-deferred, they can be an useful option to diversify your tax liabilities as part of your overall asset allocation plan. As I have mentioned before, I bonds are also tax free if used for education, so they can be part of your education savings plan as well.

Similar Posts:

PrintFriendly

If you have enjoyed this article, please consider subscribing to Think Your Way To Wealth updates using an RSS reader or by email to get all of the latest posts and updates delivered for free!

Leave a Comment

Page 1 of 11

Money Hackers Network Think Your Way to Wealth - Blogged Directory of Finance BlogsBlog Directorypfblogs.org logo Personal  Blogs - Blog Catalog Blog DirectoryA World of Personal Finance Bloggers Join My Community at MyBloglog!