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  • Writer's pictureBridget Sullivan Mermel CFP(R) CPA

I Bonds: Buy Now or Wait until May? Like Planting Zucchini!

Figuring out if you want to buy I bonds now or wait until May can be confusing. With guaranteed interest rates on these savings bonds going from 7.12% to over 9.5% in May, we're getting the question--should I buy them now, or wait?

Before getting carried away with I Bonds, remembering the basics is important. I Bonds stands for Inflation Bonds. They are savings bonds issued by the US Treasury. They're safe investments backed by the US Government.

We've covered whether or not I Bonds are appropriate for you and how to go buying them, and what to do if you want to buy I Bonds for kids in previous episodes. In this episode, after a brief intro, we talk about timing. How does the interest rate work if you buy them right now? How does the interest rate work if you wait until May?

Remember that I Bonds are not fore everyone, for every dollar, or for every time of life. Still, if they're appropriate for you, it's exciting!

They're safe and they're guaranteed to pay over 7% now and 9% in May. Make sure you watch to the end to find out deciding when to buy I Bonds is like planting zucchini

Here are some important points to the show!

00:00 Welcome

00:38 I Bonds Explained

04:10 Understanding I Bond interest rate timing

09:51 Timing I Bonds is like Planting Zucchini

Here's Bridget's firm website:

John's firm website:

For advisors around the US:

Thanks for watching and please subscribe!


John: I bonds pay around 7% interest right now, but starting May 1st, they're going to be paying over 9% interest. Should you buy your I bonds today or wait until after May 1st to buy them? That's our topic on today's episode of Friends Talk Financial Planning. Hi, I'm John Scherer, and I run a fee-only financial planning practice in Middleton, Wisconsin.

Bridget: I'm Bridget Sullivan Mermel, and I've got a fee-only financial planning practice in Chicago, Illinois. Before we begin, John, let's just remind people to subscribe. It helps our channel and helps you find out about new videos and new information that we have coming out every week. So, John, tell me, what are you telling people about I bonds.

John: Yeah. It's been a topic of conversation in my client meetings for sure. And maybe we'll start, Bridget, with just a little refresher. We've had several episodes on I bonds, but just to make sure we’re all on the same page here, I bonds are inflation-protected bonds. They’re issued by the treasury, so they're guaranteed by the strength of the government and very secure. There’s a fixed rate and a variable rate, and it's based on inflation and based on some calculations.

And it resets every May and every November. November 1st the announcement came out, and I think the number was 7.12% that we would be getting for these six months. And on May 1st, they're going to announce the new number, and we sort of know what it is. We think it’s going to be around 9.5% percent, maybe even a little higher than that. And you can only buy $10,000 of I bonds; you can invest $10,000 per year per person. A single person can do $10,000, while a married couple can do $20,000.

The question I'm getting from folks is I haven't bought my I bonds for 2022 yet. I could buy them today and get the 7.12% rate for the next six months. And then in October, I'd get that 9% rate. Or do I wait until May 1st to buy them and just start with that 9% rate? I think that's the question that would be interesting to hear your opinion on and talk about. Is there anything else you want to say before we dig into the question of decision making?

Bridget: Yeah. I think there's one other item. You have to commit to having your money in the I bond for a year. After the year, you can get the money out. If you take the money out between year one and five, they don't pay you for the last quarter, the last three months of interest. There's a slight penalty, but it's not bad. It's more like a bonus if you actually keep it in over five years.

John: Okay, let's dig into that. I think that's a really great point. Again, this is just to refresh everybody's thinking. Maybe some viewers are looking at this for the first time and say, “Geez, 9%. That's like buying a CD.” I talked to clients about I bonds in a similar way as the CD process. I think it's critical that people remember that the money has to be in there for a year. If you were to buy an I bond today, you can't get it out for one year.

Bridget: Right.

John: And so, after a year, it's totally awesome. But in that first year, if you need money, the money in the I bond can’t be part of your emergency fund. It’s not the money that you have set aside in case you need to work on your transmission or that sort of thing. This is extra money.

And I tell people, hey, if you have money sitting in the bank, and you would use it to buy a CD if rates were good enough, but they're not very good, and you don't ever plan to use this cash, then take a slice of that cash you've got in the bank and put it into an I bond. That's the place where I see I bonds working best. I think that's a super point to make sure people are aware of that requirement before they charge out and buy one without knowing the rules.

Bridget: Yeah, exactly. It's not for everybody, it's not for every dollar, and it's not for all times in life. I would say probably for most people at some times in their life, it's more appropriate than at other times. It's important to talk about when I bonds are appropriate and when they are not. And maybe we'll get back to that at the end after we talk about this issue of timing.

John: The question of when to buy.

Bridget: Exactly. If you buy now and the prevailing rate that they're paying is 7.12%, you get that for the next six months.

John: April to October, right?

Bridget: Yeah. And then in October, it ticks up to 9.6% or higher—whatever the next prevailing rate is.

John: Right. Whatever the rate is set to on May 1st. If your six-month mark is anytime between May 1st and October 31st, it'll be whatever they announced coming up, right?

Bridget: Yeah. So that means if you really are so attracted by the 9%, then wait until May 1st. However, you will get that 9% after six months. The treasury is always a little bit behind on paying the rate.

John: Right. That is so critical, Bridget. I would like to stop for a minute if I can jump in on that. It's not a question of do I want a 7% or a 9%? If that were the case, we would not have this discussion. If I buy it now at 7%, I'm going to get the new rate, that 9%, but I'm not going to get it until next October.

Bridget: Right.

John: And that's really important. You're not losing the rate if you don't buy it. It's just a matter of are you going to get 7% for the next six months and then the 9% or are you going to start with the 9% and then renew in November and get whatever the new rate is? Maybe it's higher, maybe it's lower? We don't know that. So that's the decision point.

Bridget: Exactly. And so, you are just trying to do timing. That's what you're deciding on. However, if you wait, you will lose out on the 7%. So if you wait until May 1st, you're going to lose out on the 7% rate, but then you'll get the 9% rate right away.

John: Yeah, right. Here's the question. I'm in this spot. I'm intending to buy some I bonds this year, probably like a lot of people, I just haven't gotten around to it because of taxes and all these other things. Okay, I'm in this spot. New rates are coming up. What should I do? Should I buy it today or should I wait two weeks and buy it on May 1st?

Bridget: It's up to you. I have seen forum discussions among a group of professionals where the CFAs, or certified financial analysts, sort of duel it out, arguing which option is hypothetically better. And that's not how my brain works. What I'm thinking is, am I in? Is this good? Is this a reasonable decision? The answer is yes whether I want to buy it now or whether I want to wait. Either one is going to be fine. The biggest thing is to take action.

If you're motivated to take action today, take it. Don't wait for two weeks. You never know if you're going to be motivated to take action in two weeks or not. You never know what's going to come up. So that's my two cents. The other thing is that, honestly, I believe in market timing rules. I believe that, like the research has indicated, the best time to get in the market is now, not to wait until some other time.

Do it methodically, and don't wait for your emotions to catch up to you or anything like that. If you got the money, put it in now. When they do these longitudinal studies, it works out the best for people. But in this case, it's not going to be that big of a difference, because, again, you can only put $10,000 in an I bond, so you can't move it up that much.

John: Right. I love your response. I don't know if it was intentional or not, but you said something like, you should do whatever you want to do, whatever you feel like. That reflects the situation well. Thank you for exposing that for our viewers. All in all, it doesn't matter. If you were to lose 2%, which, again, we don't lose it, it's just delayed. On $10,000, that's $200. That’s almost negligible in the long run. If you want to give me $200, I'll take it. But this isn't the difference between whether I can pay for my daughter's wedding in two years or whether I can make that down payment on the house.

It's nice to have, but it’s not changing the world. It's good. It's a smart decision. And I love your point on if you're motivated the most important thing is to take action. What's the biggest mistake somebody can make if they fit this profile? The biggest mistake is not doing it, because then you come to the next year, and you haven't done anything. So taking action is more important than trying to pin the exact timing down.

We're really talking about a rounding error difference in return anyhow. Think of what the rates were two years ago, three years ago. Think about how the rates of CDs have changed over the years. We're talking about do you want a really good rate or great rate? I mean, it's 7%, 8%, 9% interest compared to what CDs have been paying. I bonds are doing really well, and we're not talking about a million dollars. So make a decision. Take action. That is a super way to put it.

Bridget: To use a metaphor. I'm thinking about working on my garden and the way that I do it is something like, okay, I'm motivated to plant some zucchini today, so I better go and plant zucchini. If I wait, it's not going to happen. It might not happen in two weeks. Today is the day, and it might not turn out perfectly. If I know I'm going to have time set aside to complete this gardening project in a few weeks, then maybe I will, but otherwise I need to act today.

John: I love that analogy. And think about this. If this were early in March, and you're motivated to plant your zucchini, that could be a mistake, because we’re in the Midwest, and we might still have frost. We're in this in-between period. We can kind of look at the situation and say, “It's going to be pretty good no matter what.” Don't plant it in February. Don't plant it in July. But to your point, when I ask, what should I do, the answer is whatever you feel like doing. You're in the right spot when you're ready to do this. Either option is okay.

Bridget: Exactly. Because it's not my top priority item. The other items in my life are higher priorities than this. If I feel motivated to do this, then I'm going to do this. Things like getting in touch with my family is more vital. This is more of an icing-on-the-cake category. And so, it's not in the vital choice. So that's why I say whatever you feel like, just do it.

John: So I think the takeaway might be, listen, if you've got extra money in your bank account, you've got enough to cover emergency funds, and you’ve got money you're going to leave sit for more than a year, buying I bonds makes sense. Whether you buy today or buy in two weeks, you're going to get a really good rate. The most important thing is to take action if you fit that category.

Bridget: With that let's wrap it up. I'm Bridget Sullivan Mermel. This is John Scherer. And we're both members of the ACP or the Alliance of Comprehensive Planners. It's a group of fee-only financial planners that operate all over the country. It's a non-for-profit group, and we just get together to share ideas and help each other.

John: Right. And if you like what we talk about on our show and would like to find an adviser in your area, visit And also, don't forget to hit that subscribe button.

At Sullivan Mermel, Inc., we are fee-only financial planners located in Chicago, Illinois serving clients in Chicago and throughout the nation. We meet both in-person in our Chicago office and virtually through video conferencing and secure file transfer.

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