Don’t confuse an I bonds coupon rate with what you actually earn. You earn the bonds yield if you buy and hold to maturity. The yield is made up of three components, two of which are known at purchase, the fixed coupon and the price you pay for the bond. Over time the bonds earned yield is also effected by the inflation adjustment to the bonds principle, which happens every 6 months based on an inflation index. To further complicate matters, if you sell before maturity you will earn what is referred to as the “total rate of return” on the bond, which will incorporate a fourth variable, the price you ultimately sell the bond at. If this is not understood before purchasing, it would be best to invest elsewhere.
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