There haven’t been many safe investments that could beat inflation except for the I bond, but even that safety net may soon not pack as heavy an inflation-fighting punch.

That's because the record high 9.62% interest rate on I bonds issued through October will drop Nov. 1 to 6.48%, significantly lower but still one of the best investments out there, experts say.

The rate change is based on the change in the consumer price index (CPI) from March to September. The new rate is below the 8.2% annual rate of inflation in September, which means when the rate is adjusted for inflation, you’re looking at a negative interest rate.

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What is an I bond and how do they work?

It’s a 30-year Treasury bond that protects you against inflation. It pays both a fixed interest rate and a rate that changes twice a year with inflation.

Interest is compounded semiannually, meaning every 6 months a new interest rate is applied to a new principal value that equals the prior principal plus the interest earned in the last 6 months. The bond’s value grows because it earns interest and because the principal value gets bigger.

You can buy $10,000 worth from the Treasury and another $5,000 using your tax refund. You can cash them in after 12 months, but if you do so in less than 5 years, you lose the last 3 months of interest.

Do you pay taxes on I bonds?

You must pay federal income tax but no state and local taxes on I bonds. You can either report each year's earnings or wait to report all the earnings when you cash the bond.

If you use the money for qualified higher education expenses, you may not owe tax on the earnings.

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Why is the variable rate dropping when inflation is still high?

The variable rate on the I bond is based on the change in inflation in the past 6 months. In this case, the rate set on Nov. 1 will be based on inflation from March through September.

“July and August months slowed quite a bit that resulted in a lower inflation reading,” said Ken Tumin, founder of bank account comparison site depositaccounts.com.

July month-over-month CPI was unchanged from June and August rose 0.1%. In September, monthly CPI accelerated again by 0.4%.

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What is the fixed rate and does that ever change?

The annual fixed rate is announced every May 1 and Nov. 1 for all I bonds issued during the next 6 months and remains at that rate for the life of the bond. It’s been at 0% since Nov. 1, 2019.

The Treasury could narrow the gap between the inflation rate and I bond interest rate by raising the fixed rate portion on Nov. 1, but that’s unlikely to turn the real, or inflation-adjusted yield positive. If Treasury raises the fixed rate, it will likely be by a very small increment (think, tenths of a percentage point).

The last time it was above 1% was Nov. 1, 2007.

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Is an I bond still a good investment?

Yes, because other similar quality investments, including savings accounts, Treasury bills and certificates of deposit (CDs), offer even lower returns.

Online savings accounts offer a little more than 3% interest and CDs offer around 4% interest, “and those are the best ones, not the average ones,” said Tumin. Treasury bill yields are below 5%.

Plus, remember, the current rate of 9.62% still applies for all bonds purchased through Oct. 31. Those bonds will earn 9.62% for six months, then switch to the 6.48% for the next six months. That would make the one-year return about 8.05%, still not bad.

Or “maybe the next 6 months of inflation will be less than 9.62% and then the next 6 months below 6.5%,” Tumin said. “If that happens, you will have a real yield for the next year.”

Also, they never lose money because the actual interest rate can’t go below zero and the redemption value can’t decline.

"Treasury will always exchange an I bond for its par value if the investor has owned that security for 12 months," John Rekenthaler, Morningstar vice president of research, wrote in a note last month. "Effectively, I bonds possess whatever maturity date the investor desires."

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When is the best time to buy an I bond?

To lock in the record 9.62% rate for six months, buy I bonds by Oct. 31. You’ll also earn the full interest for the month of October on Nov. 1, Tumin said.

But to be safe, buy a little earlier because the Treasury will take a couple of days to process your purchase.

“I found you should make sure the purchase is no later than the second to last business day of the month,” he said. “For this month, make sure you purchase I bonds no later than Friday, Oct. 28.”

This advice is if you already have an account set up with the Treasury with a confirmed bank account, he noted. Otherwise, leave yourself even more time for your purchase.

Generally, “for maximum return, it's best to buy I Bonds near the end of the month and redeem them early in the month,” he said.

Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at [email protected] and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.

This article originally appeared on USA TODAY: I bond interest rate will drop soon from a record high. Act fast.