New Savings Bond investments at record levels

Wednesday, February 15th, 2006
Categorized as: Savings Bond investment rate

New investments in Savings Bonds in January reached a level of over $1.5 billion. This is the highest level of Savings Bond investments in a single month in over 10 years.

A little more than 86% of the investments went into Series I bonds. That level has been topped only by last November’s 87.1%.

For comparison, new Savings Bond investments are typically in the range of $5 to $10 billion annually while January’s investments hit an annual rate of $18 billion. The reason for the surge, of course, is the current interest rate on new I bonds, 6.73%.

The incoming wave is made up entirely of large investors. Calculating from the total number of paper bonds issued in each series, the average Series EE bond issued in January represented an investment of about $86, while for I bonds the comparable investment was $1,426.

One does wonder how many of these investors understand this eye-popping rate is only good for six months. It will likely be followed by a much lower rate. We’ll have more on that later this week when we learn the CPI results for January.

Sales of electronic bonds at TreasuryDirect made up 22% of the total investments.

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:

One Comment

On February 17th, 2006 Inflation update: Savings-Bond-Advisor said:

[…] It's clear from the questions I receive and the current rate of investment in I bonds that many I bond investors don't understand that the rates earned by their I bonds change every six months based on the inflation rate. If the next rate is in fact 0%, a lot of the investors now rushing to buy I bonds will be in for a bit of a shock. […]

Comments Closed

June 1, 2010

After six years, over 400 posts, 3,680 real comments, and over 90,000 spam comments (thank you, Akismet, for making managing a blog with comments possible), I am closing public comments on I will contine to update the main articles on this site, but not the comments.

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Tom Adams

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