Yes, this is a truly great time to buy bonds. Rates are no longer near zero, so there is the possibility of rates falling and your bonds will appreciate when they do. It is the best time in years to buy bonds. That answers your question.
November 1, 2024. Series EE savings bonds issued November 2024 through April 2025 will earn an annual fixed rate of 2.60% and Series I savings bonds will earn a composite rate of 3.11%, a portion of which is indexed to inflation every six months. The EE bond fixed rate applies to a bond's 20-year original maturity.
While shorter-term bond yields have declined significantly since 2023, yields on longer-term bonds are trending higher as 2024 ends. Investors appear focused less on recent Federal Reserve (Fed) interest rate cuts, and more on continued solid economic data and inflation trends.
The 4.28% composite rate for I bonds issued from May 2024 through October 2024 applies for the first six months after the issue date. The composite rate combines a 1.30% fixed rate of return with the 2.96% annualized rate of inflation as measured by the Consumer Price Index for all Urban Consumers (CPI-U).
Unlike I-bonds, TIPS are marketable securities and can be resold on the secondary market before maturity. When the TIPS matures, if the principal is higher than the original amount, you get the higher amount. If the principal is equal to or lower than the original amount, you get the higher original amount.
Against this backdrop, the MPC decided to reduce the policy rate by 25 basis points, to 7.75%, with effect from 22 November 2024. The decision was unanimous.
A recession is a significant, widespread, and extended decline in economic activity. Riskier assets like stocks and high-yield bonds tend to lose value in a recession, while gold and U.S. Treasuries appreciate.
Global growth forecasts are largely unchanged from last quarter, with the pace of economic expansion in 2024 slowing moderately in 2025. Easing inflation, resilient consumers, and a broadening of central bank rate cuts underpin our expectations for a soft landing.
Cons of I Bonds
This cap makes I Bonds unsuitable for those looking to invest larger sums. Early withdrawal penalty: If you cash in your I Bonds before five years have passed, you lose the last three months of earned interest. This penalty may impact liquidity for those who need their funds sooner.
Although experts optimistically predicted rates would fall close to 6% by the end of 2024, projections have changed significantly. Fannie Mae now expects average 30-year fixed mortgage rates to hold above 6.5% until early 2025.
If you hold the bond for less than five years at the time when you cash it in, you will lose the last three months of accrued interest. On the other hand, you can avoid the I Bond withdrawal penalty by holding onto your bonds for the long haul.
With the November 2024 update, I bonds now carry: New Fixed Rate of 1.20%
Purchase prices start at $25, and you can buy in any amount above that up to $10,000 per person, per calendar year. You also can buy an I bond in paper form, through the Tax Time Purchase Program.
Must I pay tax on what the bond earns? You choose whether to report each year's earnings or wait to report all the earnings when you get the money for the bond. If you use the money for qualified higher education expenses, you may not have to pay tax on the earnings.
1. Saving Accounts. There's a good chance you already have a savings account. Like checking accounts, they're federally insured and are generally the simplest and safest place to keep cash in good times and bad.
On a short-term basis, falling interest rates can boost the value of bonds in a portfolio and rising rates may hurt their value. However, over the long term, rising interest rates can actually increase a bond portfolio's return as the money from maturing bonds is reinvested in bonds with higher yields.
Bonds usually go up in value when the stock market crashes, but not all the time. The bonds that do best in a market crash are government bonds such as U.S. Treasuries. Riskier bonds like junk bonds and high-yield credit do not fare as well.
Investment advisers say now is a fine time for bonds. They are a good investment in 2024, experts say, for the same reasons they felt like a bad investment in 2022. That year, the Federal Reserve embarked on a dramatic campaign of interest-rate hikes in response to inflation, which reached a 40-year high.
Treasurys are generally considered "risk-free" since the federal government guarantees them and has never (yet) defaulted. These government bonds are often best for investors seeking a safe haven for their money, particularly during volatile market periods. They offer high liquidity due to an active secondary market.
3.4% expected in September. That implies two more 25 basis point cuts from where rates are today. In 2026, the FOMC expects to cut by another 50 bps, to 3.4%.
With inflation gradually cooling, the Fed adjusted its policies in 2024 with rate cuts in September, November, and December. Additionally, the economy showing signs of slowing has many experts believing mortgage interest rates will gradually descend in 2025.
Imagine you're negotiating a business loan, and the lender offers an interest rate of 4.25%. After some discussion, they agree to lower it by 25 basis points. This means your new interest rate is 4%, potentially saving you a significant amount in interest payments over the life of the loan.