The interest earnings on Series I savings bonds are applied, regardless of the day during the month that you choose to buy or sell them. Such a technicality means that bondholders can buy late in the month and sell early in the month while still earning the entire month’s worth of interest.
Firstly, it offers greater liquidity to bondholders because their money is tied up for a shorter period of time. You are committing money late into the month and gaining access to that money early into the month, with no negative effect on your interest earnings.
It may come in handy if the money is needed for a major purchase, a financial emergency or a more profitable investment venture.
Secondly, it boosts your effective return on Series I bonds. The prudent bondholder who bought I bonds on the last day of a month and sold them early in the month is invested for nearly two months less.
Tax season opening
The Treasury also allows taxpayers to buy up to $5,000 per year, per Social Security Number, in paper Series I savings bonds. This amount excludes the $10,000-per-year limit that applies to electronic I bonds purchases through TreasuryDirect.gov.
One drawback is that you can only use all or part of your tax refund to buy the paper I bonds — a small tax refund means a smaller purchase in I bonds. And, because you’ll be buying I bonds during tax season, you’re limited to a purchase window that only includes the composite rate offered from November to April.
But, purchasing bonds through tax refunds means you can invest more in I bonds (up to $15,000 total per year) if you find that they are offering attractive returns.
After receiving the paper bonds, you can convert them to electronic bonds that will be recorded into your TreasuryDirect account.