Financial savings I Bonds are a novel, low-risk funding backed by the US Treasury that pay out a variable rate of interest linked to inflation. With a holding interval from 12 months to 30 years, you possibly can personal them as a substitute for financial institution certificates of deposit (they’re liquid after 12 months) or bonds in your portfolio.
New inflation numbers have been introduced (late because of the authorities shutdown) at BLS.gov, which permits us to make an early prediction of the November 2025 financial savings bond charges simply earlier than the official announcement on the first. This additionally permits the chance to know precisely what an October 2025 financial savings bond buy will yield over the subsequent 12 months, as a substitute of simply 6 months. You’ll be able to then evaluate this towards a November 2025 buy.
New inflation fee prediction. Could 2025 CPI-U was 319.799. September 2025 CPI-U was 324.800, for a semi-annual inflation fee of 1.56%. Utilizing the official composite fee method:
Composite fee method: [Fixed rate + (2 x semiannual inflation rate) + (fixed rate x semiannual inflation rate)]
This leads to the variable part of rate of interest for the subsequent 6 month cycle being ~3.12 to three.13%, relying on the fastened fee.
Tips about buy and redemption. You’ll be able to’t redeem till after 12 months of possession, and any redemptions inside 5 years incur an curiosity penalty of the final 3 months of curiosity. A easy “trick” with I-Bonds is that in the event you purchase on the finish of the month, you’ll nonetheless get all of the curiosity for the whole month – identical as in the event you purchased it to start with of the month. It’s finest to provide your self just a few enterprise days of buffer time. For those who miss the cutoff, your efficient buy date shall be ran into the subsequent month. (It is best to at all times promote on the very starting of the month.)
Shopping for in October 2025. For those who purchase earlier than the tip of October, the fastened fee portion of I-Bonds shall be 1.10%. You can be assured a complete rate of interest of 1.10 + 2.88 = 3.98% for the subsequent 6 months. For the 6 months after that, the full fee shall be 1.10 + 3.12 = 4.22%.
Shopping for in November 2025. For those who purchase in November 2025, you’re going to get ~3.12% plus a newly-set fastened fee for the primary 6 months. The brand new fastened fee is formally unknown, however is loosely linked to the true yield of short-term TIPS with some reductions. Within the earlier 10 days, 5-year TIPS actual charges have ranged from 1.19% to 1.30%. If I needed to guess, I’d put a brand new fastened fee someplace between 0.8 to 1.0%, for a complete fee of about 4%. Each six months after your buy, your fee will alter to your fastened fee (set at buy) plus a variable fee based mostly on inflation.
When you have an current I-Bond, the charges reset each 6 months relying in your particular buy month. Everybody will ultimately get this variable fee. Your bond fee = your particular fastened fee (based mostly on buy month, look it up right here) + variable fee (whole bond fee has a minimal ground of 0%).
Purchase now or wait? Between these two choices, in case you are a long-term holder, you would possibly seize the 1.1% fastened fee “hen within the hand” in October because the fastened fee will probably be decrease in November. For those who’re in it for the short-term, it’s possible you’ll wish to purchase in November in case inflation shoots up.
Distinctive options and advantages! There are positively causes to personal Collection I Financial savings Bonds, together with inflation safety, tax deferral, exemption from state earnings taxes, and potential tax advantages if used towards certified instructional bills.
Distinctive drawbacks! You’ll be able to solely purchase new financial savings bonds by way of TreasuryDirect.gov, which is restricted in its customer support assets and options. There may be additionally no choice for paper tax varieties nor statements (and even on-line month-to-month statements), so your heirs could by no means know they exist! In the event that they do discover it, it might take them a number of months and lots of effort to shut out all of the property paperwork. In case your password is ever compromised, they won’t change any misplaced or stolen financial savings bonds (they explicitly settle for no legal responsibility). The juice is probably not definitely worth the squeeze when you’ll be able to personal particular person Treasury bonds or TIPS inside any full-service brokerage account.
I additionally used to consider that the federal government wouldn’t tamper or try to politically affect these BLS CPI statistics which are on the core of many essential capabilities, together with Social Safety inflation changes, TIPS, and these I Financial savings Bonds. Now I’m not so positive.
Personally, I offered all my financial savings bonds in 2024 and don’t plan to purchase any extra. I’m older now and I really feel the small potential profit simply doesn’t outweigh the small risk that I might lose the whole quantity on account of estate-handling errors or on-line hack. I’d fairly personal TIPS and US Treasuries instantly in a full-service brokerage account.
Annual buy limits. The annual buy restrict is now $10,000 in on-line I-bonds per Social Safety Quantity. For a pair, that’s $20,000 per yr. As of 2025, you’ll be able to solely purchase on-line at TreasuryDirect.gov, after ensuring you’re okay with their safety protocols and user-friendliness. (No extra tax refund financial savings bonds.) Technically, the acquisition limits are per Social Safety Quantity or Employer Identification Quantity. For these on the lookout for one other solution to broaden their buying energy, meaning it’s also possible to purchase for a kid, grandchild, LLC, or a belief.
Backside line. Financial savings I bonds are a novel, low-risk funding which are linked to inflation and solely out there to particular person traders. Now you can solely buy them on-line at TreasuryDirect.gov. They’ve each distinctive profit and downsides. For extra background, see the remainder of my posts on financial savings bonds.
[Image: 1942 US Savings Bond poster – source]