I-Bonds Continue to Shine
Last fall I wrote a blog post about the attractiveness of I bonds (technically Series I savings bonds) from the US government. Since then these bonds look even better.
Series I bonds pay interest based on rates that are set to the inflation rate every six months. At the latest reset date, the interest rate was 7.1%. Yes, that’s right, a fixed rate of 7.1%, for six months, on a US government guaranteed savings bond.
What’s the catch?
Only a a few.
Catch 1. You are limited to $10,000 per person. That’s a shame. But you can buy one for yourself, your spouse, your kids… Not the dog, unfortunately.
Catch 2. You have to buy them yourself, your financial planner can’t do it for you. That’s also a shame.
Catch 3. The interest rate will reset lower if inflation slows in the future.
Catch 4. There are (modest) penalties for taking the money out before 12 months, and even more modest penalties if you cash in in less than 5 years.
So if you have extra cash laying around and are a little nervous about putting it in investment markets, this is a great home for it. Also a great place for money that you think you need in a few years for a major purchase, college, etc.
To purchase you need to setup an account at treasurydirect.gov. You link the account to your bank and you are in business.