Series I Savings Bonds’ Paying 6.89%

Series I Savings Bonds’ Paying 6.89%  

Investors should consider purchasing I bonds before rates change May 1^st, 2023. As of today, I bonds are paying a combined rate of 6.89% guaranteed by the federal government. If you haven’t purchased I bonds in 2022, there is still time to do so. In a calendar year, one social security number or one EIN may buy up to $10,000 in electronic I bonds and up to $5,000 in paper I bonds with your tax refund.

What is a Series I Savings Bond?

In short, I bonds protect you from inflation. You earn a combined rate with each I bond. I bonds are especially attractive as they are guaranteed by the federal government.

Combined rate = Fixed rate + Inflation rate

The fixed rate is known at time of purchase. The fixed rate is an annual rate and never changes. The inflation rate is based on changes to the Consumer Price Index for all Urban Consumers (CPI-U). The inflation rate is reset on May 1 and November 1 each year. As of today, the combined rate for I bonds is 6.89%.

Redemption rules:

• You can redeem your I bond after 12 months (money illiquid for the first 12 months)
• If you redeem the bond in less than 5 years, you lose the last 3 months of interest

Summary:

If you have extra liquid cash sitting in a checking or savings account, you should consider if purchasing $10,000 worth of I bonds would be suitable for your investment portfolio. If inflation happens to plummet back to the federal reserve’s goal of 2%, then you can always liquidate the I bond after 12 months. You can purchase I bonds directly through https://treasurydirect.gov/savings-bonds/i-bonds/ . If you have not signed up for a login through TreasuryDirect before, take note to be very careful with the verification process. If you do not answer the information exactly, you could be stuck with the arduous process of having to send additional documents to get verified.