The interest on I bonds (Series I Savings Bonds or Inflation-Protected Bonds) stands at 9.62% as of 9-9- 2022. If this is something that may interest you, you can visit treasurydirect.gov. Here are some things to keep in mind when deciding whether to buy series I savings bonds:
- First, you have to purchase the bonds through www.treasurydirect.gov. It’s easy to set up an account but beware of hold times if you need customer service.
- Second, your money is not liquid for 1 year so this has to be money you can leave invested for at least that time.
- Third, you can cash the bonds after a year, but you will lose three months interest as a penalty. The penalty goes away after 5 years.
- Fourth, you are limited to buying $10k per calendar year. Someone can buy an amount up to that limit per year.
- Fifth, the interest isn’t subject to state and local taxes but is subject to federal income tax.
- Lastly, they are issued by the US Treasury, so they are backed by the full faith and credit of the US government.
In the end, for the majority of people I speak to daily, I bonds make sense to keep as part of a diverse portfolio because they offer a fixed rate of return and a fixed principal value.