Q & A

The following e-mail Q/A may be helpful to others…

Hi Bill,

The answer to your question is no. The I Bond pays a rate called a composite rate, which is based on two separate components. The first component is called the fixed rate, which remains the same for the entire life of the bond. The second component is the inflation rate, which is updated every 6 months based on actual changes in the Consumer Price Inflation CPI index.

At the end of 2001 (Nov/Dec), the fixed rate for I Bonds was 2% – so that may be your permanent fixed rate. The current CPI inflation rate is 3% – so your I Bond should be paying roughly 5% for the current 6-month inflation period.

This link provides a more detailed explanation of I Bond rates.

http://treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_iratesandterms.htm

Best of luck,
bob

—–Original Message—–
Sent: Thursday, December 27, 2007 12:51 PM
To: Bob Brinker
Subject: Brinker Advisory Services – Feedback

First Name: Bill
Last Name: **********

Message:
——————————————————–
You guys do a good job. One question you might answer in the section on I Bonds. Question is: If you purchase an I Bond in 2001 at 5.86% does that bond draw that interest for it’s life, regardless of the fact that the current ones are only drawing 4.23?
Thanks,
Bill

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