Another writeup. In short, you can expect to make about a 7% or a bit less IRR guaranteed by buying at the end of this month and holding for 11-14 months (11 because you get Oct for free despite buying at the end, 14 if you wait 3 months more to forfeit the new, unknown rate that follows the just determined one).
https://www.depositaccounts.com/blog/inflation-treasury-series-i-savings-bonds/
So based on this and the above numbers, if you buy an I Bond on October 31, 2022, the value of the I Bond on October 1, 2023 would be about 6.43% higher. For 11 months, this comes out to an annualized yield of about 7.01%.
Below is an estimated annualized return for I Bond redemptions from October 1, 2023 to January 1, 2024. It is assumed you will buy the I Bond at the end of October 2022 which gives you almost an extra month of interest. This effectively reduces the 3-month penalty to 2 months.
- 7.01% (11mo) redeem on 10/1/23, 6mo of 9.62%, 3mo of 6.48%, and 3mo of 0% (penalty)
- 6.97% (12mo) redeem on 11/1/23, 6mo of 9.62%, 4mo of 6.48%, and 3mo of 0% (penalty)
- 6.93% (13mo) redeem on 12/1/23, 6mo of 9.62%, 5mo of 6.48%, and 3mo of 0% (penalty)
- 6.90% (14mo) redeem on 01/1/24, 6mo of 9.62%, 6mo of 6.48%, and 3mo of 0% (penalty)
The highest guaranteed rate would be an annualized return of 7.01% for about 11 months .
Note, it’s best not to wait until the last day of the month to buy I Bonds at Treasury Direct… make sure the purchase is no later than the second to last business day of the month. For this month, make sure you purchase I Bonds no later than Friday, October 28th.
Of course you don’t need to plan whether to cash out in 11-14 months now - you can wait and see how CD or TIPS rates are doing compared to the next 6 month rate and decide then.
Also, in the comments, there’s some glitch on TD.gov that’s making it hard to buy certain types of gifts, so if you have an issue, it’s technical but may not be resolved in time, because it’s the government.