Series I Bonds

Hedge against inflation.  

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Series I Savings Bonds (commonly referred to as I Bonds) are a type of U.S. government savings bond designed to protect investors from inflation. Here are the key features and benefits of I Bonds:

Key Features:

1. Inflation Protection:
– Interest Rate: I Bonds earn interest based on a combination of a fixed rate (set at purchase and lasting the life of the bond) and a variable rate (adjusted every six months based on inflation as measured by the Consumer Price Index for All Urban Consumers, CPI-U).
– Composite Rate: This combination results in a composite interest rate that adjusts semiannually to reflect inflation.

2. Purchase Limits:
– Annual Limits: Individuals can purchase up to $10,000 in electronic I Bonds per calendar year through the TreasuryDirect website. Additionally, you can buy up to $5,000 in paper I Bonds using your federal income tax refund.  treasurydirect.gov


3. Tax Advantages:

– Tax-Deferred Growth: Interest earned on I Bonds is exempt from state and local taxes. Federal income tax on the interest can be deferred until the bond is cashed in or matures, whichever comes first.
– Education Benefits: If used for qualified higher education expenses, interest earned on I Bonds may be exempt from federal income tax.

4. Redemption and Liquidity:
– Minimum Holding Period: I Bonds must be held for at least one year before they can be redeemed.
– Early Redemption Penalty: If redeemed before five years, the last three months of interest are forfeited as a penalty.
– Maturity: I Bonds earn interest for up to 30 years if not redeemed earlier.

5. Security:
– Backed by the U.S. Government: Like other U.S. Treasury securities, I Bonds are considered extremely safe investments as they are backed by the full faith and credit of the U.S. government.

6. How They Work:
– Interest Calculation: The interest on I Bonds is compounded semiannually. The fixed rate remains constant for the life of the bond, while the inflation rate adjusts every six months based on the latest CPI-U figures. The Treasury announces these rates in May and November.


Please keep in mind this information should not be considered as financial advice. Investment decisions should be based on individual research and consultation with a qualified financial professional. The value of investments can fluctuate, and past performance is not indicative of future results. Always consider your risk tolerance and financial goals before making investment decisions.


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About The Publisher

Jeff Corbett
As entrepreneur, author and magazine publisher with over 25 years’ experience in the global marketplace, I enjoy writing as an advocate for international business and personal freedoms. Thanks to my experiences building businesses I also have a tremendous interest in reading or writing about motivation and self-discipline.