[rashkov]

Some interesting charts on this page. The 7.12% rate consists of a 0.00% fixed rate and a 3.56% inflation rate.

The formula is: Composite rate = [fixed rate + (2 x semiannual inflation rate) + (fixed rate x semiannual inflation rate)]

7.12% = [0.0000 + (2 x 0.0356) + (0.0000 x 0.0356)]

This rate is only valid until the inflation rate gets re-adjusted after 6 months. There is an interesting chart showing what the fixed rates and inflation rates have been throughout the history of this bond.

For those considering investing in this, there is a $10,000 max per eligible person. Eligibility includes: 1) United States citizen, whether you live in the U.S. or abroad. 2) United States resident. 3) Civilian employee of the United States, no matter where you live.

Parents can buy these bonds for their children, so a family of four could invest $40k earning 7.12% for at least 6 months. Eligibility requirements are here: https://www.treasurydirect.gov/indiv/research/indepth/ibonds...

[cornstalks]

> invest $40k earning 7.12% for at least 6 months

I'm sure you know this so this comment is more for the casual reader: "I bonds earn interest for 30 years unless you cash them first. You can cash them after one year. But if you cash them before five years, you lose the previous three months of interest."[1]

Worth keeping in mind these aren't really short-term investment vehicles. But earning 2x inflation rate is pretty decent for a low-risk investment.

[1]: https://www.treasurydirect.gov/indiv/research/indepth/ibonds...

[pvitz]

> But earning 2x inflation rate is pretty decent for a low-risk investment.

Maybe you mean this anyway, but your statement could be misunderstood: One doesn't earn twice the inflation rate. It is multiplied by two to give an annual rate that can then be combined with the annual fixed rate. When calculating the coupon, you would of course have to adjust for half a year.

[timr]

These are a good place to store your emergency fund (assuming you roll your money into them 10k at a time, so that you have short-term liquidity when needed.)

[JumpCrisscross]

> 7.12% rate consists of a 0.00% fixed rate and a 3.56% inflation rate.

For comparison, TIPS trade at a negative real yield [1].

[1] https://www.treasury.gov/resource-center/data-chart-center/i...

[LatteLazy]

Thanks for clarifying the maths. I missed the semi annual nature and couldn't see how 0+3.56 made 7.12