If you’re about to log in to TreasuryDirect and buy I bonds, close the tab. Wait until Nov. 1.
This is one of those rare cases where the calendar is on your side, and a little patience could pay you for the next 30 years.
Here’s why.
What you get if you buy today
Right now, a Series I savings bond pays a composite rate of 4.26%, according to the Treasury. That number runs through Oct. 31, and it’s made of two pieces: a fixed rate of 0.90% and an inflation rate of 3.34%.
Those two pieces behave very differently, and understanding the difference is the whole game.
The inflation half resets every six months based on the Consumer Price Index (CPI). It’ll go up when inflation runs hot and down when it cools. You don’t control it, and you can’t lock it in.
Whatever you buy today, that 3.34% is gone in six months and replaced with whatever inflation says next.
The fixed half is the opposite. Whatever fixed rate is in effect when you buy stays glued to your bond for as long as you own it — up to 30 years. It never changes.
It’s the only part of an I bond you actually get to choose, and you choose it by picking the month you buy.
That’s why the fixed rate is the number that matters. The inflation piece just keeps you even with rising prices. The fixed piece is your real return, the part that beats inflation.
Why Nov. 1 looks better
The Treasury announces new I bond rates twice a year, on May 1 and Nov. 1. The inflation half is pure math from the CPI. The fixed half is set by the Treasury with no published formula, which is why analysts spend a lot of energy trying to reverse-engineer it.
One of the most-watched of those analysts is David Enna, who runs the site Tipswatch. His rule of thumb: The fixed rate tends to land at about 65% of the six-month average yield on 5-year Treasury Inflation-Protected Securities (TIPS).
In August, with 5-year TIPS yielding around 2.13% and the six-month average near 1.84%, that math pointed to a fixed rate of 1.20%, possibly 1.30%, at the Nov. 1 reset.
Let me be clear about what that is and isn’t. It’s a projection from an independent analyst, not guidance from the Treasury. The Treasury could surprise everyone.
But the real-yield relationship has held up well enough over the years that I’m comfortable acting on it, and I’d rather you know the reasoning than take my word.
Real yields on TIPS have been elevated for months. If that holds through October, a fixed rate above 0.90% is the likely outcome.
What a third of a point is worth
Going from 0.90% to 1.20% sounds like nothing. Let’s run it anyway.
On a $10,000 I bond, that extra 0.30% is $30 a year. Over 30 years, that’s $900 — and that’s before the inflation adjustment compounds on top of it, which pushes the real gap higher.
If the fixed rate hits 1.30%, the gap is $40 a year, or $1,200 over the life of the bond.
Not life-changing. But you get it for doing nothing except waiting seven weeks. I can’t think of many places where standing still earns you $900.
And if you’re the type who buys the $10,000 maximum every year for a spouse and yourself, double all of that.
The rules you’re agreeing to
Before you buy in any month, know what you’re signing up for. These are the Treasury’s terms.
You can’t touch the money for 12 months. Period. An I bond isn’t an emergency fund; it’s a place for money you won’t need for at least a year.
Cash out before five years, and you forfeit the last three months of interest. After five years, there’s no penalty.
You’re limited to $10,000 per person, per calendar year, in electronic bonds through TreasuryDirect. The old trick of buying an extra $5,000 in paper bonds with your tax refund is gone — the Treasury killed that program starting in 2025.
The interest is exempt from state and local income tax. You’ll owe federal tax, but you can defer it until you cash the bond or it matures.
Quick thought — most financial “gurus” got rich selling advice, not following it. I’d rather show you what actually works, because I’ve lived it. Sign up for the free Money Talks Newsletter for money advice from someone who takes his own. 10 seconds, no spam.
Who should still buy now
Waiting is the right call for most people. But not everyone.
If you haven’t used your 2026 limit yet and you want to use it, you don’t have to wait for November to buy this year. You can buy in October and still buy again in January against the 2027 limit.
But if your plan is one $10,000 purchase this year, buying in October instead of November just means a lower fixed rate for three decades. There’s no tax-year reason to rush — the $10,000 limit resets on Jan. 1 whether you bought in October or November.
If you’re funding a bond as a gift or for a trust that needs to be done before a specific date, the calendar may force your hand. Fine. A 0.90% fixed rate is still respectable by recent standards, and 4.26% beats plenty of savings accounts.
If you think the Tipswatch math is wrong and the Treasury holds the fixed rate at 0.90% or cuts it, buying now locks what you know. That’s a legitimate view. It’s just not the one the real-yield data supports right now.
And here’s a middle path: The September CPI comes out in mid-October, and that report completes the six-month string that sets the new inflation rate. Enna publishes the math on his site the same day.
By then, you’ll know one half of the November rate for certain and have a sharper read on the other. You can still buy in October if the picture changes.
What you’re really buying
I spent 10 years on Wall Street, and I’ll tell you what I told clients then: An I bond isn’t a way to get rich. It’s a way to make sure the government can’t get rich off you through inflation.
Most of what I bonds pay simply keeps your dollars from shrinking. The fixed rate is the only slice that puts you ahead. So when you buy one, you’re really buying that fixed rate, and you’re buying it for 30 years.
That’s why the month matters. Buy in September, and you’ve locked 0.90% until 2056. Wait until Nov. 1, and you may lock in the best fixed rate since late 2023, when the Treasury paid 1.30%.
I bonds have plenty of quirks worth understanding before you buy at any rate. But the biggest quirk is also the simplest: The day you buy decides your real return for the rest of your life.
The bottom line
Don’t buy I bonds in September. Don’t buy them in October either, unless you have a reason that beats a higher fixed rate for 30 years.
Set a reminder for Nov. 1. Check the Treasury’s announcement. If the fixed rate came in above 0.90%, buy. If it didn’t, you’ve lost seven weeks of 4.26% interest on money that was presumably sitting in a savings account earning something anyway.
That’s the trade: a few weeks of interest against three decades of a better rate. I’ll take the decades.
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