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Breaking News: The November 2023 I Bond Rate is 5.27%!
The November I bond composite rate is 5.27% (US Treasury) which is 2.63% earned over 6 months.
Read on to decide if you’d like to continue buying I Bonds, or if you’d rather cash them out.
Also consider if and when you may want to Swap out your existing I Bonds for new I Bonds at a higher fixed rate.
November I Bond Fixed Rate is 1.30%!
The November 2023 I Bond inflation rate is 3.94%
The November 2023 – April 2024 I Bond inflation rate is announced at 3.94%* based on the September 2023 CPI-U data. This rate is over .5% higher than the prior rate. This inflation rate will be applied to your individual I Bond on its own 6-month cycle. For example, if you bought in October 2022, your I Bond won’t renew at 3.94% until April 2024!
How is the I Bond Composite Rate Determined?
The composite rate is a combination of the fixed rate and the semiannual inflation rate.
The fixed rate for I Bonds issued in November 2023 is 1.30%
The semi-annual inflation rate is 3.94%.
When you combine the two, and the fixed rate itself gets an inflation adjustment, you get the composite rate of 5.27%. Here is the exact math on the I Bond composite rate: [0.0130 + (2 x 0.0197) + (0.0130 x 0.0197)] = 5.27%.
How long do I get the current I Bond interest rate for?
This fixed rate stays with those I Bonds throughout the 30 years that they earn interest.
The current semiannual inflation rate of 3.94% will reset every 6 months following the purchase, or renewal, of your I bond.
How was the November I Bond inflation rate determined?
We are keeping a close eye on the latest CPI-U numbers, which you will see below determine the inflation rates for I bonds.The latest CPI numbers were releasedon October 12, 2023.
The November I Bond inflation rate is set at 3.94%!
CPI-U Data to Project the November 2023 Inflation Rate
| March 2023 CPI-U: | 301.836 |
| September 2023 CPI-U: | 307.481 |
| November Inflation Rate: | 3.94% |
How does the current I Bond rate compare to historical rates?
When we compare the 6-month I Bond rates against 12-month Treasuries at the time we see that the 6-month I bond rate is an average of 1% lower.
At an initial rate of 5.27%, buying an I bond in April gets roughly 0.2% less compared to the 5.44% 12-month Treasury Bill rate (October 31, 2023).
Unlike 2021 and 2022, I Bond rates are more in line with other similar interest rate products.
One big difference between a Treasury Bill and the I Bond is that you can get out of Treasury Bills before 12 months AND you don’t have to give up the prior 3 months’ interest if you cash out in the first 5 years. You could be subject to changes in the price of the Treasury Bill if you don’t hold it to maturity, however.
What to consider when buying I Bonds in November 2023
You are required to hold I bonds for 12 months, yet you generally only know the rate you’ll get over the next 6 months.
There are 2 rates you need to keep in mind:
- The current rate for November 2023 purchases is 5.27%
- Your renewal rate, which will go into effect 6 months after your purchase, is unknown until late April 2024.
The November 12-month I Bond rate of 5.27% is similar to CDs and Treasury Bills that are roughly 5.5% interest over the same time frame. Also consider the 3-month recent interest penalty if you cash out in the first 5 years.
If you buy an I Bond in November 2023 and cash out in 12-months you’re only guaranteed interest over the next 6 months. You’re guaranteed to get at least 2.63% over the next 12-months, since it’s possible you’re renewal rate could be zero.
What if You’re Considering Cashing Out Your I bonds?
If you’re considering cashing out your I Bonds make sure you find the best time that gets you the most interest at my blog on When to Cash Out Your I Bonds.
What you need to know about I Bonds
An I bond is a U.S. Government Savings bond that carries a fixed interest rate, plus an additional inflation adjuster, so that you get an inflation-adjusted real rate of return. In a world of inflation worries and few inflation-adjusted investments, the I Bond is a great place to look for savers.
What are the details with an I Bond?
- You have to hold them for 12 months minimum. You can’t cash out before then.
- If you cash out between the end of year one and the end of year five, you lose your prior three months interest as a penalty.
- You can only buy $10,000 per person, per year, and you have to do it at TreasuryDirect.gov
- I bonds are a great place for part of youremergency fund money
Bonus: Listen to our podcast with savings bond expert David Enna from TipsWatch.com on I bonds: US Series I Savings Bonds Simplified
Why I Bonds are so interesting right now
I Bonds were somewhat unknown until they started offering eye-popping yields, based on the inflation rate, in May 2021 with the 3.54% rate.
Then, in November 2021 I bond rates doubled to 7.12% and then 9.62% in May 2022! The last super-high inflation rate was 6.48% in November 2022, which also came with a 0.4% fixed rate.
Now, for purchases in November 2023 the rate is 5.27%.
More importantly, the fixed rate is 1.30%. The fixed rate hasn’t been this high since October 2007.
I Bonds got famous for the high inflation rates in 2021 & 2022 – they may become popular again for new purchases based on the 16-year high fixed rates in November 2023.
How do I Bonds work?
When the US Government announces the 6-month inflation rate, you’ll be earning double that amount for half the year. Most interest rates are quoted in annual terms, but I bonds are quoted in semi-annual 6-month terms.
To calculate the annualized rate and to compare it to other rates just double the 6-month inflation rate, add in the fixed rate and then multiply the fixed rate times the inflation.
That last factor is quite small, so feel free to ignore it to get a rough sense of the current rate. To see the math on each factor go to Treasury Direct I Bonds Interest Rates.
The current composite rate of 5.27% is only earned for the first 6 months of your I Bond. Your November 2023 I Bonds purchase will turn your $100 into $102.63 just 6 months later. This is a 5.27% annualized rate.
When do I get the next interest rate with I Bonds?
Six months after your purchase you’ll get the new six-month inflation rate, still get the same fixed rate from the start of your I Bond, and your money will grow by your new composite rate.
Your interest will be added every six months to the principal of your I Bond, and you’ll get the next 6 months interest applied to that new principal amount. This is called semiannual compounding.
You are required to hold I bonds for 12 months, and you only know what the next 6 months will bring for interest, but what’s the worst that could happen?
What’s the worst-case scenario when I buy an I Bond?
The worst-case scenario for purchases in November 2023 is you earn 5.27% interest for the 6 months after you buy your I bond, followed by 0%.
While unlikely (it’s only happened twice out of 52 inflation rate resets), it is possible that inflation is negative, which could cause your next 6-month renewal rate to be 0%.
If this worst-case occurred, your November 2023 I Bond purchase would turn $100 into $102.63 6 months later, and if the renewal rate is at 0%, then you would only get a 2.63% return over the next 12-months.
While your current 12-month guaranteed rate doesn’t compare to other 12-month investments, you are guaranteed, that every 6 months your renewal rates will be 1.30% above inflation for the 30 year life of your I Bond.
What are the interest rates on investments that are similar to I Bonds?
(based onBankrate.com andFederal Reserve Datafrom October 31, 2023)
Unlike most of 2021 and 2022, I Bond rates are now more in line with other similar time frame savings options.
What should I do if I’ve already maxed out I Bonds purchases for 2023?
Wondering what to do if you’ve already maxed out your I Bonds purchases for 2023? You may want to look into the gift box method for buying more than $10,000 in I Bonds.
If you don’t want any more I Bonds, consider short-term Treasury Bills!
For guidance on buying Treasury Bonds and Treasury Bills check out our blog:Get More Interest From Buying Treasury Bonds and Bills (T-Bills) Through Treasury Direct.
How to Get Strategic with Your I Bonds Purchase
There are no partial months in I Bond world! When you are buying I Bonds it serves you best to buy towards the end of the month, and to sell towards the beginning of the month.
David Enna, author ofTipswatch.comsuggests being even more strategic, “You can buy an I Bond near the last day of the month and get credit for a full month’s interest, so you can effectively cut the one-year holding period to 11 months and a day, but realistically, you may want to extend the holding period to 14-15 months.
If you lose the prior three months of interest by cashing in early and are unhappy with the new 6-month rate, you would want to hold on for the full higher interest period in months six to twelve and wait for another full three months of lower interest before cashing in after month fifteen.”
How to Take Action On Your Interest Rate Money
When saving your money over a 12-month time frame I Bonds are just one of many investments to consider. Zvi Bodielikes to call I bonds “America’s Best Kept Investing Secret.” Consider your I bonds purchase not just for the short run, but also over the long run as part of a healthy emergency fund savings balance. To buy your I Bonds, go toTreasuryDirect.gov.
Bonus: Listen to the podcast with David Enna from TipsWatch.com for more in depth analysis on I bonds: US Series I Savings Bonds Simplified
Bonus: For guidance on buying Treasury Bonds and Treasury Bills check out our blog: Get More Interest From Buying Treasury Bonds and Bills (T-Bills) Through Treasury Direct.
More I Bonds Resources
- 9 Steps on how buy I Bondsby Jeremy Keil
- A Complete Guide to Investing in TIPS and I Bonds (2022)by David Stein withMoney For the Rest of Us
- Podcast: US Series I Savings Bonds Simplifiedfeaturing David Enna fromTipsWatch.com
- Treasury Direct: Series I Savings Bonds
- 3 Things You Should Know Before Choosing A Financial Advisor
- 7 Questions That Could Make or Break Your Retirement
- Free Retirement Video Course:Your 5 Step Retirement Income Plan
- Subscribe to Retirement Revealed on Google Podcasts
- Subscribe to Retirement Revealed on Apple Podcasts
Connect With Jeremy Keil:
Disclosures:
This material is provided for informational purposes only and is not solely intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The views and strategies described may not be suitable for all investors.They also do not include all fees or expenses that may be incurred by investing in specific products. Past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. You cannot invest directly in an index. The opinions expressed are subject to change as subsequent conditions vary. Advisory services offered through Thrivent Advisor Network, LLC.
Sure thing! Let's dive into the key concepts covered in the article about I Bonds for November 2023. Here's a breakdown:
1. November 2023 I Bond Rates
- Composite Rate: It's determined by combining the fixed rate (1.30%) with the semiannual inflation rate (3.94%), resulting in a composite rate of 5.27%.
- Fixed Rate: Stays constant at 1.30% throughout the 30-year period.
- Inflation Rate: 3.94% for the November 2023 - April 2024 period, based on CPI-U data released in September 2023.
2. I Bond Mechanics
- Composite Rate Calculation: (Fixed Rate) + (2 × Semiannual Inflation Rate) + (Fixed Rate × Semiannual Inflation Rate) = Composite Rate (5.27%).
- Interest Rate Reset: Occurs every six months, affecting the subsequent interest calculations.
- Minimum Holding Period: You're required to hold I bonds for at least 12 months.
3. Comparison with Historical Rates
- Comparison with Treasury Bills: The 6-month I Bond rate (5.27%) tends to be around 1% lower than the 12-month Treasury Bill rates.
- Rate Variance: I Bond rates in November 2023 are more aligned with similar interest rate products compared to previous years.
4. Factors to Consider
- Renewal Rate Uncertainty: At the time of purchase, you're aware of the current rate (5.27%), but the subsequent rate (after 6 months) is unknown until late April 2024.
- Cash Out Consideration: Exiting I Bonds within the first 5 years incurs a penalty equivalent to forfeiting three months' interest.
5. Worst-case Scenario & Investment Alternatives
- Risk Assessment: The worst-case scenario involves earning the current rate (5.27%) for 6 months followed by a potential 0% renewal rate, resulting in a 2.63% return for the first 12 months.
- Comparison with Similar Investments: I Bonds offer competitive rates compared to 12-month CDs, Money Markets, Savings Accounts, and Treasury Bills.
6. Strategic Approaches & Further Resources
- Optimizing Purchase Timing: Buying I Bonds towards the end of the month allows for a full month's interest credit.
- In-depth Analysis & Resources: Various resources, including podcasts and guides, delve into I Bond intricacies and strategic approaches for investment.
7. Practical Advice & Actions
- Consideration for Exceeding Annual Limit: Methods like the gift box approach for purchasing additional I Bonds beyond the $10,000 annual limit.
- Long-term Investment Perspective: Viewing I Bonds as a part of a balanced emergency fund and exploring additional investment avenues.
The article covers a comprehensive range of aspects related to November 2023 I Bonds, including rates, mechanics, historical context, considerations, risk assessment, comparative analysis with similar investments, strategic approaches, and actionable advice.
Feel free to ask if you'd like more detailed information on any specific aspect!
