Sometime toward the end of this month I will buy more I bonds for my personal and trust accounts at TreasuryDirect. The current annual rate is 1.76%, so I will earn half of that, or 0.88% for the first six months (January through June). The rate for each subsequent six month period depends on inflation as measured by the CPI-U. If inflation is 0% or less for the six months ending March 31, 2013, the rate for the second six months would be 0%, so I would earn a total of 0.88% over one year (actually a little more, since I'm buying toward the end of January, but will earn interest for the full month of January). Even this worst case scenario isn't bad, since I'm earning a little less than 1% in my online savings account. More importantly, I increase my allocation to super-safe, inflation-protected investments.
To review the details of I Bonds, see these previous blog posts:
Note that there have been changes to I Bonds that are covered in the third post above, but most of the basics covered in the first two posts above still apply.
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