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Author: jrr7 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35367  
Subject: Re: I-bond yields crash as expected... Date: 5/1/2002 12:27 PM
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According to


the fixed rate remained at 2%.

The inflation number is 0.28%, which when combined with the fixed rate using the formula

Composite rate = [Fixed rate + 2 x Inflation rate + (Inflation rate X Fixed rate)] X 100
Composite rate = [0.0200 + 2 x 0.0028 + (0.0028 X 0.0200)] X 100
Composite rate = [0.0200 + 0.0056 + 0.000056] X 100
Composite rate = [0.025656] X 100
Composite rate = 0.0257 X 100
Composite rate = 2.57%

If you have a surplus of I-bonds with a 2% fixed rate, cash them in before they start earning peanuts. It's simple to find bank accounts paying more than 2.57% (although they're not tax-deferred).
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