Old I Bonds History

Retirement Retired Fools
1

Almost 20 years ago for some reason I decided to buy 8 $100 I bonds. Until recently with treasuries and one other I bond purchase that has been the extent of my bond buying.

They were purchased monthly throughout 2003 and are paying 10.77%. The oldest one issued back in 5/1/2003 has finally doubled in value to $200.28. Roughly a whopping 3.72% return. I think I’ve done much better with stocks and housing.

I think a lot of people are buying I bonds w/o having a clue what they are and that if inflation settles down the returns will drop significantly and they will be looking to sell them for the higher returns of stocks :slight_smile:

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2

Is there a problem with cashing out of them if they begin to be a less attractive investment?

3

Not at all. IIRC, you pay a 10% interest penalty if you redeem them after one year. After 5 years there is no penalty.

Sounds good to me.

Cheers!
Murph
BL Home Fool

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4

Isn’t the interest penalty only on the last six month period not the entire time you have held the bond?

Answering my own question from the treasury direct website:

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5

I, and many others, buy I-bonds as part of the fixed income portion of our investments. So it has nothing to do with the stock or real estate portion of our investments. 3.72% return in fixed income isn’t so bad over that period of time which included many years of near-zero rates.

6

A bit worse than I thought on the pre-five year cash in: 25% of one year’s interest.

However, if rates for I-bonds continue to out strip bank CD’s and money market rates , it still makes sense.