Last year, investors and savers rushed to buy Series I savings bonds as their inflation-linked yields approached 10%.

Now, the yield on I bonds is much, much lower. If you purchased these bonds for the high yield last year, it may be time to cash them in and invest elsewhere.

Let me explain why – and where to put your money instead for above-market yields…

Series I savings bonds pay interest based on a fixed rate, plus a rate derived from the current inflation rate. The Treasury uses a semi-annual inflation rate and a formula to combine the two. Here is the calculation for the current rate:

For May 2022 through November 1, 2022, the rate on I bonds was 9.6%. In November, the rate dropped to a still-respectable 6.9%.

Now for the bad news: if you purchased I bonds last year (between May and October) to grab the near-10% yield on the one-year anniversary, the yield on your bonds will drop to 3.38%. You will earn less than the 4.3% current rate, because the fixed rate on your bonds is 0.00%.

Series I savings bonds can be redeemed without penalty after five years. Earlier redemption will cost you your three most recent months of interest. If you look up the value of your bonds, the value you see on the Treasury Direct website already discounts the most recent three months of interest.

While the yield on I bonds has fallen dramatically, market interest rates remain elevated, and there are plenty of ways to earn much more than 3.38%. I suggest you wait for three months after your bonds start earning the current, low interest rate and then cash them in.

Invesco High Yield BulletShares ETFs are one investment idea I recommend to my Dividend Hunter subscribers. These ETFs own bonds that mature in a specified year, allowing you to select when a fund will mature and be redeemed. You can use these ETFs to set up a bond-ladder strategy and lock in higher yields for years. Current high-yield BulletShares ETFs mature between 2023 and 2030. Yields-to-maturity for the series are at or above 8%.

Because these ETFs hold bonds until they mature, you are assured that if you own shares until redeemed, your average annual returns will be very close to the current yield to maturity. BulletShares are ETFs, so they can be sold at any time. They pay monthly dividends, allowing you to compound the returns with dividend reinvestment.I explain how to best use them to my Dividend Hunter subscribers. Click below to see how to join and get the full scoop.