I bond investments plummet in May
Friday, June 16th, 2006
Categorized as: Savings Bond investment rate
According to statistics released yesterday by the Treasury’s Bureau of Public Debt, I bond sales in May were $252.2 million, which represents an annual rate of $4.86 billion. This is down drastically from the annual investment rate of $12.83 billion during the previous six months.
During those previous six months, of course, the I bond composite rate was 6.73%, which attracted a lot of investors who didn’t really understand how I bonds work. Now the composite rate is 2.41%.
All I bonds receive the same inflation component, so what makes one I bond better than another is their fixed base-rate. The bonds issued during the previous six months had a base rate of 1.0%, while those issued in May had a base rate 40% higher – 1.4%.
So May’s I bonds are a better long-term investment, but they aren’t nearly as popular. It’s so hard to be rational when it comes to money!
In May, EE bond investments were $153.1 million, which is also down slightly from recent levels. Likewise, investments through TreasuryDirect made up only 9% of the dollars invested, which is a large decline from previous levels.
If you’re a reader of my book, Savings Bond Advisor, you have access to an online graph showing the level of Savings Bond investments since Series I bonds were introduced in 1998. Check your Book Notes for the link.