Series I Savings Bonds
Is inflation destroying your savings? Do you feel nervous putting money into the volatile stock market? If you answered yes, then you should consider purchasing a Series I savings Bond! If you buy before the end of October then you’ll secure a 9.62% annual interest rate. But wait, there’s more!
You’d probably expect to hear something like that on a late-night infomercial. Yet it’s accurate. Right now, you can secure an annual return of 9.62% by buying I bonds. However, this is only for savings bonds issued May 1, 2022 to October 31, 2022.
Why Buy Bonds?
Savings bonds are investment tools where you loan money to the federal government in return for 30 years’ worth of interest payments and your money back when you cash the bond.
The interest rate of Series I bonds is adjusted twice throughout the year, typically based on the Consumer Price Index. If the index (and inflation) go up, then the bond’s interest rate adjusts higher. But if inflation goes down, the bond’s interest rate will drop.
Since we are in the midst of record-high inflation, Series I bonds are producing more interest than they have in recent years. Additionally, since these bonds are backed by the federal government, they are considered one of the safest investments you can make.
Bond’s typically produce interest for 30 years although you can technically cash your bond at any point after 12 months. If you cash it early then you will sacrifice three months of interest.
How To Buy
Savings bonds can be purchased online at TreasuryDirect.gov with a free account. The minimum investment is just $25 and you can purchase up to $10,000 for electronic bonds and up to $5,000 for paper bonds. To ensure issuance by October 31, TreasuryDirect recommends making the transaction by October 28.
The biggest risk with bonds is that, if inflation falls down to the Fed’s target of 2%, then the interest rate on your bond will most likely drop as well, making it less lucrative.
Thanks to their abnormally high interest payments, series I savings bonds can be a safe, lucrative place to store your money for the next few months. But this doesn’t mean they are right for everyone. If you’re considering purchasing I bonds, or making any other investment for that matter, discuss them with a financial advisor for personalized advice that can best fit your specific goals and financial circumstances.
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