With inflation hovering near 40-year highs, some investors are looking for alternative ways to weather the storm. For many, a Series I Savings Bond is just the ticket. According to Forbes.com, inflation is sitting at 8.3%. I Bonds give investors a rate of return plus inflation protection and are backed by the U.S. government. The current yield for bonds that are issued between May - October of 2022 is at 9.62%1, largely due to current high inflation. If you buy an I Bond within that timeframe, you will receive that interest rate for 6 months, then it will adjust to a new interest that is dictated by the base rate(currently at 0%) and the inflation protected rate. This cycle will continue for each subsequent, 6-month period.
I Bonds are pretty simple to set up. You can go to TreasuryDirect.gov and open a free account to purchase these federally-backed securities directly from the U.S. Treasury.2
Here’s how to get started.
1. Gather your info. Make sure you have the following close at hand: your taxpayer identification number, current address, checking or savings account information, and email address.
2. Go to Treasurydirect.gov's account creation page. Navigate to the bottom of the page and select “Apply Now” on the left. This will begin your account creation journey. Next, you will choose between an Individual or Entity account. Select Individual account type (it’s the default option) and click “Submit.”
3. Enter your info. Using the information gathered in step 1, fill in the fields requested and check the box at the bottom to certify your Taxpayer Identification Number. Click “Submit.”
4. Select a personalized image. Take some time here to select an image and caption you will remember. Think of this as a visual password for your account. Click “Submit.”
5. Secure your account. Select your password and security questions on this screen. Make sure the answers to your security questions are impossible to guess but easy to remember. Click “Submit” to move to the final step.
6. Check your email. Finally, look for your TreasuryDirect account number in your email. You’ll need this to log into your account later.3
You can begin purchasing I Bonds now that you’ve created your account. Here are a few things to keep in mind. I Bonds earn interest for 30 years unless you cash them in. You can do this after a year has passed from the time of purchase, but you'll lose the previous three months of interest. However, there is no penalty if you let them mature for five years or more. The maximum amount you can invest is $10,000 total per calendar year.4
The current inflationary environment is creating an opportunity to invest a portion of your portfolio in a relatively conservative asset that is backed by the US Treasury and will provide returns that will keep up with inflation for the time being. If you would like to discuss how you can best use I Bonds in your financial strategy, feel free to give me a call.
1. Treasurydirect.gov, 2022
2. Treasurydirect.gov, 2022
3. Treasurydirect.gov, 2022
4. Treasurydirect.gov, 2022
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite, LLC, is not affiliated with the named representative, broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.