Run Don’t Walk!

I-Bond Update

 Since writing about I Bonds last December, I want to give an update.  With inflation surging to 8.5%, (the largest 12-month increase since December of 1981), the Treasury has announced the new interest rate for I Bonds will be an annualized rate of 9.62%!  It is currently 7.12%.  which combines to a 12 month rate of 8.54%!

I-Bonds are now the safest investment with the highest return.

I Bonds are now the safest investment with the highest return you can make in 2022.  I bonds come with a few special benefits that I didn’t mention previously:

·      Exemption from state income taxes

·      In some cases, redeeming your I Bond for education expenses is exempt from Federal Taxes.

·      Tax deferral until bond redemption

·      Inflation protection

Calculating Your Return on Investment

If you buy an I bond before April 28th, 2022, what happens over the next 12 months? Buying the I bond in April 2022 means you earn 7.12% interest for the 6 months after you buy your I bond, followed by 9.62% after that. For example, your $100 would turn into $103.56 6 months later, and then be worth $108.54 12 months later.  

I-Bond Caveats:

·      You must hold them for 12 months minimum.  No cashing out before then.

·      If you cash out between 12 months and 5 years, you lose your prior three months interest as a penalty.

·      You can only buy $10,000 per tax id.

·      You can only buy through TreasuryDirect.gov

·      Or you can attach form 8888 to your tax return and have your refund purchase a paper I-bond up to $5000.00.

Run Don’t Walk!

There isn’t much time left to employ the above scenario and take advantage of the I Bonds very favorable Composite Rate of 7.12% and the upcoming 9.62%.  In our low-interest rate and high inflation environment, I Bonds represent a rare potential opportunity to increase the yield on the fixed income portion of your portfolio.  I’ve purchased my I-bonds and if you would like to learn more about purchasing I Bonds feel free to contact me.