New investments in Savings Bonds dip further in August

Wednesday, September 20th, 2006
Categorized as: Savings Bond investment rate

July’s 20-year record low for new investments in Savings Bonds didn’t last long, as August investments, at $246.6 million, were even lower.

With one month left in the government’s 2006 fiscal year, it appears total investments for the fiscal year will be in the range of $8.4 to $8.5 billion dollars. This will be up a healthy amount from the two previous fiscal years, 2004 ($7.2 billion) and 2005 ($6.3 billion), but disappointing compared to the two years before that, 2002 ($9.8 billion) and 2003 ($11.3 billion).

On the other hand, Series I Savings Bond investments in the 2006 fiscal year will be higher than any other year except 2003.

So the real disappointment is investments in Series EE bonds, which have been in decline, particularly since the Treasury changed the rules on how Series EE rates work in May 2005. In FY-2006, the first full fiscal year under the new rules, Series EE investments will be only about two-thirds of the level in FY-2004, the last full fiscal year under the old rules.

Readers of my book 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.

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FDIC Insured Certificates of Deposit can pay 1 or 2% more than savings bonds when held for a similar length of time. See top CD Rates Below:

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