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My Personal Finance Journey

Personal finance observation, musing and decisions in a journey toward financial independence by 36 with at least $1 million.

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Timing Your Series I Bond Redemption





The ultra-low inflation component in the latest semi-annual savings bond interest update is certainly disappointing, but it also created a good window to redeem your relatively new I-bonds without incurring a lot penalty. You don't want to redeem too early, though.

From Savings Bond Advisor:

My advice is to hold off on any rollovers until next October. I have two reasons.

The first is that since only bonds less than five years old are worth rolling over (the older ones all have base rates of 3.00% or more), you'll pay a penalty of your most recent three months interest when you redeem the I bonds you have now. You want that penalty to be three months of low interest, not three months of high interest.

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The second reason is that interest rates may continue to rise. By October we should have some idea whether the base rate announced next November could be even higher than 1.40%. If it is, you'll be sorry you hurried to switch.

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