A record number of investors bought Series I bonds from Department of the Treasury on Friday, barely making it in time to meet a crucial deadline to lock in a historically high rate of return.
Investors have until Friday to purchase I bonds and lock in a six-month interest rate of a record-breaking 9.62%. Since the bonds' 1998 debut, the rate has reset twice, falling to 6.89% on Tuesday. This is still the third-highest rate ever recorded.
I bonds are essentially risk-free investments that are correlated with inflation. In spite of this year's downturn in the overall stock and bond markets, they have proven to be a bright light for investors.
In addition to 731,336 new accounts registered in October, investors opened 359,822 new accounts last week. According to preliminary figures released by the Treasury Department on Monday, investors bought I bonds for more than $3 billion last week and for close to $7 billion in October. These purchases constitute weekly and monthly highs.
According to Treasury Department numbers released Tuesday, the Treasury sold $979 million of I bonds before the deadline on Friday. This is almost as much as was sold in three years, from 2018 to 2020, when investors purchased little more than $1 billion. On Friday, investors established 95,482 new accounts, a record-breaking number. I bond set new sales records daily, weekly, and monthly.
The website where investors may buy I bonds, TreasuryDirect.gov, crashed on Friday as the volume increased. In the last days of the 9.62% rate window, TreasuryDirect grew to become "one of the most visited websites in the federal government" the Treasury Department stated on Friday. There are normally only a few thousand tourists there at once. On the basis of inflation, I bond rates change twice a year.
The rate consists of two components: a fixed rate that remains constant after purchase and a variable rate that fluctuates twice a year in response to inflation. Every May and November, the Treasury Department releases new interest rates. By purchasing I bonds any time before the end of April 2023, investors can lock in the new 6.89% rate for a period of six months.
Through TreasuryDirect, you can buy the assets online, with a cap of $10,000 per person each year. Additionally, you can purchase an additional $5,000 in the paper I bonds using your federal tax refund.
