I Bonds: Buy in October or Wait for November 1?

Derek WuMost money decisions are boring. This one has a deadline, a lock-in, and a coin, so it gets to be slightly less boring. Treasury says I bonds issued from May 1st through October 31st earn a four-point-two-six percent composite rate. Inside that number sits a zero-point-nine-zero percent fixed rate. Quick translation, the fixed rate is the part that never changes. Whatever it is the day you buy, that's yours for the life of that bond. And Treasury sets it twice a year, May 1st and November 1st. Every bond bought in the following six months gets that same fixed rate, which means the next batch of buyers gets a new number, and the people who bought before November 1st don't. Here's why that matters over time. Hold a bond for years, and the fixed rate is the one piece of your return you can name on day one. The rest of the composite can move around it. Does that make sense? Now, the brief behind today's episode puts the lock at thirty years, so you're not picking a rate for a season. You're picking it for a very long stretch of your life. Think of it like choosing a seat on a train that only stops twice a year. Right now, the seat is zero point nine zero percent. It's a known quantity. You can see it. You can sit in it. Wait until November 1st, and you're getting off this train and boarding the next one without seeing the seat first. Here's the other piece of the setup. The forecasters expect that November 1st fixed rate to come in higher than zero point nine zero percent. That's the case for waiting. But expect isn't know. The September CPI report lands in mid-October, and that narrows the guess. It doesn't end it. So the choice is simple to state. Buy now at a known zero point nine zero percent, or wait for a number that may be better and may not. One question carries the whole decision. Will the November 1st fixed rate beat zero point nine zero percent? I'll say the uncomfortable part out loud. Nobody on this show can answer that today, and neither can anyone else. Treasury hasn't announced it. So let's be honest about what kind of coin this is. One side is printed and visible, zero point nine zero percent. The other side is blank until Treasury announces it on November 1st. You're choosing between a number you can read and a number you're hoping for. Still, the guess isn't blind. Treasury's own page lists past fixed rates, and they move from one reset to the next. Some of those moves are bigger than you'd expect. So how big is the unknown? Let's look at what the forecasters and the history actually say. Start with the forecast people are watching. David Enna wrote a piece on Tipswatch, published August ninth, with the headline saying, "The fixed rate is going higher." His line was that a new fixed rate of one point three zero percent looks like a real possibility. That is a forecast. It is not an announced rate. Say you wait and it lands at one point three zero. Compared with today's number, that is a big jump. So why not just buy on the forecast and be done with it? Because nobody outside Treasury knows the formula. One guide to I bonds calls the fixed rate the bigger unknown for that exact reason. Treasury publishes no formula for it. Forecasters can watch real yields and make an educated guess, but there is no published recipe to check their math against. Why does that matter? Because a forecast can miss. A piece from August is a snapshot before whatever has happened since. A reasonable guess can still be wrong, and that is why one point three zero is a possibility and not a promise. The same guide adds a detail I find useful. The fixed rate has held at zero point nine zero percent for the last two announcements, so it has sat still lately, which makes a jump less automatic than the headline sounds. Does sitting still twice in a row sound like a pattern? It does. Doesn't that favor buying now? Here's the thing. Two data points is a short pattern. Look at the longer list from Treasury's own page. The fixed rate was one point three zero percent in November 2023 and one point three zero again in May 2024, then one point two zero in November 2024, then one point one zero in May 2025, and then zero point nine zero in November 2025. So Treasury's page shows the fixed rate moving from one reset to the next. It slid for a stretch, and the forecast now is a climb back. Now, what about the other number, the inflation part? Think of the composite rate as having two pieces, the fixed rate and a part that follows inflation. The inflation part is the easier piece to watch. September CPI is due October 14th, and it mainly affects the inflation part of the rate, not the fixed part. So the report can tighten one half of the guess. The half that lasts thirty years stays foggy. Foggy, but leaning one direction, and that's the important thing to understand. You don't need certainty to see which way the evidence tilts. You just need to be honest about how much it tilts. Put the forecasts and the history together, and the coin flip starts to look a little weighted. Two more articles are worth putting on the table because they lean the same way. A Yahoo Finance piece from mid-September says the fixed part of the I Bond rate is expected to be among the highest in more than twenty years, starting in November. It calls that a good chance to lock in an attractive rate for up to thirty years. Notice the word expected. That's a forecast, not a result. Treasury hasn't said a word yet. And the Money Talks news piece by Stacy Johnson, a CPA, goes further. It says the current four point two six percent rate ends October 31st, and that what replaces it may make waiting worth nine hundred dollars or more. The excerpt gives no assumptions behind that number. So can I tell you how big a deposit it applies to? No. Treat it as a direction, not a quote for your account. Okay, so here's the bargain on the table. Buy now, and you own a known zero point nine zero percent for thirty years. Boring, certain, done. And waiting? Waiting is an expected improvement, expected with no guarantee attached, which means the downside deserves a plain sentence. If the November number comes in flat or lower, the wait cost you the difference. That difference gets paid every year the bond sits there. Small per year, long in total. I won't put a dollar figure on it because nobody has the November rate yet. So is the coin weighted? Yes. Can it still land on its edge? Also yes. Weighted is not the same as rigged. Here's how I'd weigh it. On one side, two published pieces point toward higher. On the other, the thing you'd be locking in today is already low, and a low number is a long time to live with. When both of those are true, I lean toward waiting. Not a promise, a lean. If you wait and it misses, you've paid for the guess. If you buy now and it climbs, you've paid for certainty. Pick the cost you can live with. That's the timing answer, and it's only for one kind of person, a bond buyer. So if you're a bond buyer at all, hold that lean. Next up, the filter that tells you whether you belong in that group. Start with savings. The Fed raised rates in mid-September after five straight holds earlier this year. That matters for savings accounts. A Motley Fool rate roundup dated October tenth shows top high yield offers reaching up to five percent APY. Some of those are promotional. The non-promo examples it lists run about four point two five percent to four point three four percent. That is a decent number for money you can pull out whenever you like. One catch, and it's the big one. Savings rates are variable. The bank can change yours at any time. CDs are the middle option. Forbes Advisor's CD rates page for October twelfth lists the top one-year CD at four point eight three percent. The top two-year is five point zero seven percent. Those are the best offers, though. Average APY is a far lower, about one point two percent to one point eight percent depending on the term. So shop around. The average bank is not paying you what the top ones are. Now, look at what each one locks. A CD fixes your rate for a set term. An I bond's fixed rate runs up to thirty years. A savings account locks nothing. A CD locks a few years. An I bond locks a piece of its rate for decades. So here's one filter, and you can use it without a spreadsheet. Do you need this money soon? If yes, pick savings or CD. Done. Don't overthink it. If it's money you won't touch for years and you want protection against inflation, an I bond is a candidate. Only a candidate. Let's make that concrete. Picture one person saving for something coming up soon. For them, a top savings offer or a CD does the job, and the I bond timing debate is noise. Now picture someone setting money aside for the long haul who worries about inflation. That's the person for whom the I bond is worth a real look. For that second group, the November one reset is the decision. Nothing else on the calendar matters as much. So here's the action. If you're in the I bond camp, check the rate after the October fourteenth CPI report, then decide on November one. If you're in the savings camp, you already have your answer. Make the call and go do something more fun with your afternoon. Made a decision? That's a win. Subscribe so you're ready for the next one. And if you've got a money choice you're stuck on, drop it in the reviews. I might just flip a coin on it next week.