| Here's the best time to redeem Series I bonds to maximize your interest | | |  | WED, MAY 17, 2023 | | | | Demand for Series I bonds swelled in recent years as investors rushed to lock in record high interest rates on new purchases of the nearly risk-free asset. Now that rates are declining, it may be time to craft an exit strategy.
That timing can be tricky, given how these investments work: You can't access the money for one year after purchase and, if you sell within five years, you'll give up the last three months of interest.
Paying attention to when your rate resets, and to what, can help you decide the right time to sell. Three things to know: - Rate resets kick in every six months starting on your purchase date, not when the Treasury Department announces rate adjustments. If you're only paying attention to the latter, you could inadvertently sell while your I bonds are still at a competitive rate.
- You don't earn interest on I bonds until you have held them for the full month. Keep that in mind when you're figuring out that early-sale penalty. Advisors recommend cashing out at the beginning of the month, if possible.
- The fixed portion of your I bond rate remains the same after purchase, meaning when your rate resets, it may be different than the headline figure for new purchases. Knowing your current rate can help you gauge how competitive it is with other savings products and investments.
For more advice to help you make smart financial decisions, check out CNBC's Financial Advisor Hub and Personal Finance section. | |
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