Savings Bond investments stagger up

Friday, January 5th, 2007
Categorized as: Savings Bond investment rate

After reaching a long-term low point in September (an annual rate of $2.56 billion compared to $8.334 billion for the Oct-Sep 2006 fiscal year), new investments in Series EE and I Savings Bonds are sort of lifting their head out of the gutter and looking around.

In October, before the last rate announcement, new investments rose to an annual rate of $2.86 billion. In November, after the EE bond rate dropped from 3.70% to 3.60% and the composite I bond rate rose from 2.01% to 4.52%, new investments rose again, but only to an annual rate of $3.89 billion, well below the historical rate of new Savings Bond investments.

As mentioned here in earlier posts, new investments in EE bonds have been suffering since the Treasury changed how it sets EE bond rates in May 2005. Even so, EE bonds outsold I bonds during the five months from June to October. And in November I bond investments were barely ahead at just 50.3% of the total.

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 January 5th, 2007 Dan said:

So strange that EE-Bonds are still outselling I-Bonds.

I can halfway understand the “confusion purchases” during the period when the low inflation rate hid that the fixed rate of the I-bond was actually a better deal. But right now even an ING account beats EE Bonds after tax! (And ING isn’t beating much lately.)

Perhaps the high EE sales are due to automated payday purchases set years ago that people didn’t bother to change?

Or maybe the masses are just too scared of math to fix there eyes on that I-bond formula for any longer than it takes to blink a few times and then return to the short paragraph explaining EE bonds, lol…

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June 1, 2010

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