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The Skinny on Series I Bonds Thumbnail

The Skinny on Series I Bonds

Investing

Series I Savings Bonds offer a hedge against inflation.  Through November 2022 you can purchase up to a max of $15,000 per taxpayer annually and receive an initial interest rate of 9.62% (annualized number).  This interest rate will vary with inflation and offers a higher yield alternative to money markets or CDs. You can purchase them at www.treasurydirect.gov.   They come with the full faith and credit of the US federal government.

  •  There is a fixed interest rate and an inflation component to these bonds.
  •  The inflation rate is changed twice a year on May 1st and November 1st 
  •  Limited to $10,000 per taxpayer per year. An additional $5,000 can be purchased if you use your Federal Tax refund.
  • Cash accrual-bonds pay interest money is reinvested-pay tax on interest when bond is cashed in
  • Accrual method-pay tax on interest on every year that you earn it
  • State and Local tax free-Federally taxed
  • How does this fit into your financial plan?
  • Locked in for one year (can’t sell for 12 months)
  • 20 year bonds and can extend for 10 more years-(30 year bonds)
  • Penalty for cashing in after one year period
  • Some are using for Emergency Fund –(not recommended) unless Emergency Fund is over funded.

When you file your taxes, you can use your Income Tax refund to purchase paper I Bonds.  You can purchase them for your own portfolio, give as a gift, or use for education funding. Through November 2022 the initial combined interest rate is 9.62% and varies with inflation to provide a hedge against inflation risk.

Series I Savings Bonds can be purchased when you file your tax return by using your Income Tax Refund.  This is the only savings bond still available in paper form.  You can purchase them for your own portfolio, give as a gift, or use for education funding.  Initial interest rate is 9.62% (through November 2022) but varies with inflation and provides you with a hedge against your inflation risk.

The only savings bond you can still purchase in paper form is the Series I bond.  The paper I Bond features eight prominent Americans with a brief biography.  You can buy them for yourself or give as a gift using your Income Tax Refund. You can also use them for education funding and may qualify for an Education Tax Exclusion.

Through November 2022 you will receive a combined initial interest rate for the bond of 9.62% which will vary with inflation and hedge your inflation risk. They come with the full faith and credit of the US federal government.

Series I Savings Bonds at a Glance (Click Here)

Using Your Income Tax Refund to Buy Paper Savings Bonds (Click Here)