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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Virtually every question about Savings Bonds has been asked and answered on this site multiple times. Use the search feature (see the box in the gray area near the top of this page) or the detailed menu on the lower part of the home page to find the information you're looking for.
Tom Adams
[…] 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. […]