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Originally Posted by Robbb
I get the 10% they are paying for the first year, but after that aren't they paying 0% for the next 4 years that you are required to hold them. Is this correct?
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Quote:
Originally Posted by Rainger99
I know that the bonds are paying 9.62 % interest and that the rates change on May 1 and November 1. Is the 9.62% from the time you buy them? Or is it from May 1? For example, if I buy one one on October 15, do I only get the 9.62% for 16 days? Or do I get the 9.62% for six months from date of purchase - whether I buy it on May 1 or October 31?
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Believe it or not the way it works is whatever the present 6 months rate is at the time of purchase that is the rate you get for the next 6 months while you hold the bond. Thus a bond purchased at the end of April will expire just prior to Nov this year. End of April - end of Oct will be 7.2%. Well the 6 month expiration is now just prior to the Nov 2022 announcement thus you get the May rate (9.62%) for the next 6 months. Couple this to the idea you can cash out after one year (with last 3 months interest forfeited as penalty since 5 years are not up) you know exactly what you are getting for a whole year with no unknown risk. Hope it helped. Hard to put into words. Go watch a youtube video. There is a lot of them on this subject. Search I bonds for beginners.