Get a Government-Backed 9.62% with This Investment

With the stock market tumbling, investors are on the hunt for safer investments that pay attractive returns. The fact that you can earn 9.62% from a U.S. Savings Bond is getting a lot of buzz.

Today, let’s review the features, pros, and cons of investing in these Series I Savings Bonds.

The U.S. government sells two types of saving bonds. We may remember the Series EE Bonds from our youth when we received them as gifts. EE Bonds pay a fixed rate, currently set at 0.10%.

Series I Bonds pay a fixed rate plus the inflation rate. The fixed-rate sits at 0.0%; however, the inflation rate portion is currently set at 9.62%.

Series I Bond rates are set twice a year on May 1 and November 1. The rate you initially earn will be in effect for the six-month window when you purchase your I Bonds. To lock in the current 9.62% rate, you must buy I Bonds no later than October 28.

Series I Bonds compound semi-annually. This means if you buy an I Bond now, it will earn 9.62% for six months, and then the rate will reset to the rate in effect on the semi-annual anniversary date. Simply put, the Series I Savings Bond rate resets every six months.

Here are the features of Series I Savings:

  • You can buy up to $10,000 of electronic I Bonds per year per person. You buy bonds through the Treasury Direct website.
  • You can buy electronic bonds for any amount of $25.00 or greater.
  • You can invest up to $5,000 of your federal tax return into paper I Bonds.
  • Paper bonds come in denominations of $50, $100, $200, $500, and $1,000.
  • I Bonds earn interest for up to 30 years.
  • You can redeem a bond after one year, but if you redeem during the first five years, you will be charged a three-month interest penalty.
  • I Bond interest is exempt from state income tax.
  • For federal income taxes, you can declare the interest each year and pay taxes or let the interest grow tax-deferred until you redeem the bonds.

Overall, in this era of high inflation, Series I Bonds are a pretty good place to…

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