Will This Popular Stock Alternative Get Even Better in 2023?
The stock market has produced extremely strong long-term returns for investors who stick with stocks through thick and thin. Even the occasional bear market has left stock investors with returns that put most other asset classes to shame.
Nevertheless, rising interest rates have made other parts of the investing universe interesting again for the first time in years. Last year, the U.S. Treasury-guaranteed 9.62% annualized rate on Series I Savings Bonds breathed new life into the decades-old fixed-income investment. Even though those high rates are now history, there's a possibility that the longer-term prospects for I Bonds could get even better in 2023.
I bonds have a trait that's rare in the investment world: Their value is tied to the rate of inflation. When I bonds briefly paid investors a 9.62% annualized rate for the first six months after purchase, it was because the Consumer Price Index had gone up by 4.81% in the six-month measuring period that the Treasury used to determine the latest rate. Similarly, when the rate on those bonds subsequently falls to 6.48%, it's because the rate of inflation eased lower to 3.24% in the six months following that prior measuring period.
Source Fool.com
