[UncleMeat]

Yes. And since the next rate will be more like 6% (EDIT: divided twice in my original post), anybody expecting 9.62% APY (which has "year" in the name) is likely to be disappointed.

Let's say you buy today and hold for one year. You get 4.81% after 6 months and then like 1.5% for the next 6 months (you lose three months of interest when you sell if you aren't holding for 5 years). And then you have to pay federal taxes. Let's say 22%. On your 10,000 you net... $492. Not anything close to the eye popping 9.62% being touted.

[snoopy_telex]

Check "Current composite rates" on https://www.treasurydirect.gov/savings-bonds/i-bonds/i-bonds...

The current rate of 9.62% is the lowest it's ever been, and its never changed drastically.

It's just FUD to claim that it'll drop to 3%.

Also, you're locked in, you can't touch the money for a year, and there's a penalty for withdraw before year 5. It's designed as a safe saving instrument, not a stock market replacement.

I, for one, am glad to have invested every year. It's a nice emergency fund.

[metaphor]

> The current rate of 9.62% is the lowest it's ever been, and its never changed drastically.

Recommend doing the math yourself as a sanity check using the composite rate formula in conjunction with historical fixed and semiannual inflation rate tables. The implication is that either the composite rate formula or the historical composite rate table is in gross error, where the latter is much more likely given a naive understanding of what the instrument's intent is.

[snoopy_telex]

Can you explain where you think the math error is on https://www.treasurydirect.gov/savings-bonds/i-bonds/i-bonds... under the “ An example” section?

[metaphor]

The suspected error wasn't in the An example section...I knew there was an error somewhere, but weighted this more probable to be correct given the effort put into clearly explaining the method in step-by-step manner.

In my previous remark, turns out that the root of the error was in too quickly and incorrectly concluding (admittedly having never purchased these bonds before and only learning of them this year as we went into a bear market) that both the fixed and inflation rate components were subject to change every six months.

It wasn't until I saw your follow-up today and attempted to revisit details without bias that I noticed this linked chart[1] which made it immediately clear what critical bit of conditional detail I had missed, that is, the fixed rate component is determined at the time of initial bond purchase and persists unchanged for the life of the instrument...whoops!

To be fair, my original remark was in response to your assertion that "the current rate of 9.62% is the lowest it's ever been, and its never changed drastically." Even with my now corrected understanding, this assertion still doesn't stand in my mind given the linked table demonstrates that the prevailing 9.62% composite rate approaches historically high levels independent of original purchase date, and although variable returns ranging from 0% to 10+% depending on issue date is agreeably not drastic to someone as young as me, it's nevertheless pretty subjective, e.g. if you bought between 05/20-10/20, you'd have seen variable APY ranging from 1.06% to 9.62%, which is objectively pretty volatile.

[1] https://www.treasurydirect.gov/files/savings-bonds/i-bond-ra...

[UncleMeat]

Divided twice by accident. It'll be more like 6%. We've only got one month of data left in the computation we don't know about. Doesn't change the math that somebody excited about getting 9.62% over the next year is going to be disappointed when they walk away with half of that.