"Assessing the Sale of I Bonds Amidst Inflation Fluctuations"

With inflation rates decreasing and the Federal Reserve increasing interest rates, the once attractive I bonds that offered a 9.62% return in summer 2022 are now less appealing, yielding around 3.97%. Financial advisors suggest considering other investment options such as new I bonds with a higher fixed rate, short-term CDs, online savings accounts, money market funds, or Treasuries, which may offer better returns. Selling I bonds requires holding them for at least a year, and selling before five years results in a penalty of the last three months of interest. Interest on I bonds is federally taxed but exempt from state and local taxes unless used for higher education expenses.