Is it Time to Sell Your I-Bonds?

Posted by John Posey

Did you buy some I-bonds in the past year or more – maybe when yields were north of 9%? Well, those I-bond rates have since cooled off to 4.3% from May to October and are scheduled to reset to 4.36% in November. If you have held I-bonds for more than one year, you may make a redemption (and forfeit interest from the previous 3 months – see previous post, Series I Savings Bonds for more info on the details).

With approximately one-year rates on CDs and treasuries ranging near 5.5% or better as of October 2023, there are some materially better yields in other cash equivalent securities. It would be wise to start shopping around for alternatives if you have I-bonds that have been held for over a year.  

Here are a few other questions that may be passing through your mind on occasion:

Are the rate hikes over? I doubt it. It seems quite probable future hikes are on the way, however, I wouldn’t expect it to be as nearly as aggressive as we experienced in the past 18 months. With that said, I think the Fed would like to level out rates as soon as inflation shows strong evidence of staying under control to hopefully avert an overtightening that could cause a recession.

Is a recession on the near horizon? I don’t know, ask me again in 6 months to a year :) . Each day that passes without strong evidence of economic carnage, I get less convicted that it’s coming. That certainly doesn’t mean it isn’t – my market forecasting skills are suspect at best. 

Wise investors know all too well that tough times eventually pass. Whether you profit from that fundamental truth is rooted in discipline.

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