It’s been a long time since Savings Bonds issued by the US Treasury, of any flavor, have been appealing. However, a silver lining to the increased inflation we are currently experiencing is that savers can now take advantage of attractive Federal Series I Savings Bonds to earn more on idle cash sitting in deposit accounts.
Purchases of I Bonds are limited to $10,000 per calendar year, per person. To take the most advantage of this opportunity you may want to act before the end of 2021.
Why Series I Savings Bonds?
The interest on I bonds is a combination of a fixed rate and an inflation rate. Once purchased, the fixed rate does not change for the entire 30-year life of the bond. The current fixed rate on bonds is 0%. The inflation rate however can and does usually change every 6 months. The current 6-month inflation rate is 3.56%. FYI: The composite rate of 7.12% is calculated by annualizing the 6-month rate (3.56% x 2).
Purchasing Series I Bonds
To maximize your purchase amount consider purchasing $10,000 prior to January 1 and then another $10,000 after January 1, in the new year.
The $10,000 limit is per account. You can open an account for your spouse, your children, your business and potentially trusts. So, a married couple could do $20,000 in 2021 and $20,000 in 2022.
Redeeming an I Bond
Who Should Consider?
If you have money parked in cash deposit accounts and do not have a need for the money in the next 12 months then you should consider taking advantage of the current I bond rates.
Reach out if you have questions about I bonds, want to quantify the benefit to you or need assistance with opening an account.
Disclosure: Nothing on this site should ever be considered to be advice, research or an invitation to buy or sell any securities. Offers of securities or investment advisory services may be made only pursuant to appropriate offering or other disclosure documents, and only after prospective investors have had the opportunity to discuss all matters concerning the prospective investment or engagement with their advisers, the issuers of the securities or Forty W Advisors a DBA of MacroView Investment Management LLC. It should be noted that past performance is not indicative of future results.
Tags: financial planning, Interest Rates, Retirement Planning, Treasury Bonds, Yield