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This is down from their previous rate of 4.28%.
I bonds are a popular investment thanks to theirlow risk profileand inflation-protected nature.
However, with rates decreasing significantly, investors will see a change to their returns.
These bond rates have two components: a fixed rate and an inflation rate.
Thenew inflation rateaffects both new and existing bondholders.
The good news is these lower rates are reflective of easing inflation but they also meanlower investment returns.
Good To Know
Depending on when you purchased your bonds, you may not see changes immediately.
This investor will also continue earning the previous 1.48% inflation rate until their rate adjusts in January 2025.
In January 2025, the first investor will have their rate adjusted to the current inflation rate.
That doesnt necessarily mean you shouldnt continue investing in I bonds.
They have a place in a broader investment strategy, especially for conservative investors.
Additionally, the low-risk nature of Treasury securities may make them attractive to conservative investors over corporate bonds.
Having awell-diversified portfoliocan help shield you from the risks presented by any individual investment.
However, thats not always possible, especially during a time like late 2024 when interest rates are falling.
Another way to maximize yourI bond returnsis to hold them for at least five years before cashing them out.
Luckily, the inflation-protected nature of I bonds helps to maximize your returns to a point.
Of course, every investment has some risks, and I bonds are no exception.
However, they may still have a place in your investment portfolio.
Takeaway
Finding and working with a financial advisor is a great idea.
A financial advisor will help keep track of your finances and assist you in attaining your financial goals.
Get to know your financial advisor options today for free!
Get to know your Financial Advisor options today for Free!
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