7% on a bond is very good. 7.2% doubles every 10 years. For those of us getting older with lots of stock assets, we (conservative investors) want to transition to something safe so that smash-and-grab market fluctuation don't make us lose our money in retirement. Tiered bonds are something safe to do when you hit your mid 50's once the "thrill" of investing in what are today called "meme" stocks ("penny stocks" in the 80's/90's) has passed.
EDIT: S1 bonds apparently aren't fixed forever. Thanks Purple_ferret points out that part of the rate changes, as it is based on a fixed rate and the inflation rate. This is why I have an RIA to filter all my decisions.
From the web:
"Inflation rate
Unlike the fixed rate which does not change for the life of the bond, the inflation rate can and usually does change every six months.
We set the inflation rate every six months (on the first business day of May and on the first business day of November), based on changes in the non-seasonally adjusted Consumer Price Index for all Urban Consumers (CPI-U) for all items, including food and energy.
However, the change is applied to your bond every six months from the bond's issue date. (The dates for these changes might not be May 1 and November 1.) When does my bond change rates?
"
EDIT: S1 bonds apparently aren't fixed forever. Thanks Purple_ferret points out that part of the rate changes, as it is based on a fixed rate and the inflation rate. This is why I have an RIA to filter all my decisions.
From the web:
"Inflation rate
Unlike the fixed rate which does not change for the life of the bond, the inflation rate can and usually does change every six months.
We set the inflation rate every six months (on the first business day of May and on the first business day of November), based on changes in the non-seasonally adjusted Consumer Price Index for all Urban Consumers (CPI-U) for all items, including food and energy.
However, the change is applied to your bond every six months from the bond's issue date. (The dates for these changes might not be May 1 and November 1.) When does my bond change rates? "