By Robert E. Quittner, Jr. CFP® & CMFC™
Investment Advisor Representative
[email protected]
Happy Friday and welcome to summertime! I am digging into the archives here and way back in 1974 Peter Allen composed a song titled “Everything Old is New Again”. Although the expression had been around for decades, his song helped cement the phrase in popular culture. The idea itself reflects the long-standing observation that history, trends, and styles tend to repeat themselves. Styles, ideas, and fashions from the past eventually come back into popularity.
I won’t be discussing the return of paisley shirts, bell-bottom blue jeans, or platform shoes, but instead the return of a popular investment theme from 2022.
First, I’ll start with the reason it is returning to the forefront. As illustrated by the chart below, year-over-year inflation, as measured by the Consumer Price Index (CPI), has been on a roller coaster over the last two years. While inflation eased from November 2025 through February 2026, it spiked again in March and April of this year.
You will notice that the Oct-25 mark shows 0%. The U.S. Bureau of Labor Statistics was unable to collect data due the federal government shut down.
I Bonds, a hot investment in 2022, are back on the front burner thanks to rising inflation. Series I savings bonds yielded nearly 10% for a brief period back then and are once again looking attractive for savers.
When you buy an I Bond from the Treasury Department, you are lending it money to help run the government. In return, you receive interest on that loan. The current annualized interest rate of 4.26% is about half a percentage point above the year-over-year inflation rate of 3.8% in April. The bonds preserve your purchasing power even as prices rise.
David Krause, a professor emeritus at Marquette University, found that I Bonds delivered average annualized returns nearly one percentage point higher than high-yield savings accounts between 1999 and April 2026. Looking forward, he predicts that I Bonds will continue to outperform those accounts by around 0.40 percentage points annually over the next five years, assuming annual inflation remains between 2% and 5%. “For investors with a holding period of at least one year, I Bonds offer a superior structural hedge against inflation,” he noted.
When buying I Bonds, it’s best to invest money that you won’t need for five years. That’s because you will lose the last three months of interest you accrued if you cash out sooner. You are locked in for a minimum of 12 months, meaning you can’t take any money out at all before then.
One thing I Bonds have in common with high-yield savings accounts is that the interest rate changes, albeit on a different schedule. Whereas commercial banks can change their rates daily, the rates on I Bonds only change once every six months. The current 4.26% rate is locked in until the end of October.
If you are considering adding I Bonds to your short-term strategy you might want to read the attached PDF we created to answer general questions.
As usual, Peter, Kyle, Jeremy, Nick, and I are available to discuss I Bonds and how they might fit into your overall investment strategy.
Enjoy the DRY weekend and the outdoors!
Rob