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November I bond may be a toss of the dice
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The other savings bond that has a semi-annually adjusted
rate is Series EE. Pederson doesn't expect any changes with the
EE this time around. That bond has a fixed rate. Buy it now and
you'll get 3.7 percent for the life of the bond. Buy it Nov. 1 and
you'll get whatever rate is issued, again, for the life of the bond.
The bond's interest rate is based to some degree on the 10-year
Treasury, but there are some other factors that allow the Treasury
to set it somewhat arbitrarily.
While savings bonds are meant to be held long-term,
there may be times when short-term investments, such as certificates
of deposit and even high-yield savings accounts provide a better
deal, at least temporarily. Check Bankrate's high-yield database
for CDs
and money
market accounts and you'll find current yields considerably
north of 5 percent. Of course, you'll need to weigh the tax considerations,
since earnings on savings bonds aren't subject to state or local
tax, and you have the option to defer federal tax until you redeem
the bond.
You can buy savings bonds at many financial institutions,
but don't wait until the last minute if you want the current issue.
It may take time for the transaction to be registered, so it's advisable
to buy five days before the deadline. A more efficient way to buy
is online at TreasuryDirect.gov.
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