I bonds, also called Series I savings bonds, are now paying a guaranteed 9.62% annualized as of May 1, 2022.

Previous, more comprehensive video on I bonds here:

Buy I bonds from the U.S. Treasury:

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The composite rate for I bonds has gone up yet again due to rising inflation. They are paying 9.62% annualized as of May 1, 2022.

These are inflation-linked bonds directly from the U.S. Treasury. They are the most direct inflation hedge asset available. The inflation rate component is attached to the CPI, or Consumer Price Index. You must buy I bonds directly from the Treasury. There’s no such thing as an I bonds ETF or mutual fund.

I bonds have a minimum holding time of 1 year and a purchase limit of $10k electronic and $5k paper annually per TIN. If held for less than 5 years, you forfeit 3 months of interest. Interest is federally taxed unless used for qualified education expenses. You’ll get the current rate for 6 months regardless of when you buy.

The closest asset to I bonds is short TIPS, or Treasury Inflation Protected Securities.

It’s probably best NOT to delay your purchase of I bonds.

Read the blog post here:

#ibonds #investing

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Disclaimer: This is not financial advice, investing advice, or tax advice. The information presented is for informational, educational, and entertainment purposes only. Investment products discussed are for illustrative purposes only. It is not a recommendation to buy, sell, or otherwise transact in any of the products mentioned. I always attempt to ensure the accuracy of information presented but that accuracy cannot be guaranteed. Do your own due diligence. All investing involves risk, including the risk of losing the money you invest. Past performance does not guarantee future results. Opinions are my own and do not represent those of other parties mentioned. Read my lengthier disclaimer here:

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I Bonds are Now Paying 9.62% as of May 1, 2022: A Hedge Against Inflation

Inflation has been a hot topic of discussion in recent times, with rising prices affecting various aspects of our lives. As individuals, it is crucial to find investment options that can keep up with or even outpace inflation. One such investment that is gaining attention is I Bonds. These savings bonds, issued by the U.S. Treasury, have been providing a reliable hedge against inflation, and as of May 1, 2022, they are paying an impressive 9.62% interest rate.

I Bonds are unique in their structure, combining a fixed interest rate with an inflation component. The fixed interest rate, set at the time of purchase, remains the same throughout the bond’s life. However, the inflation component of I Bonds is adjusted every six months based on the Consumer Price Index for All Urban Consumers (CPI-U), a widely recognized measure of inflation.

The recent surge in inflation has caused the U.S. Treasury to increase the I Bonds’ inflation rate significantly. The decision to set it at 9.62% is a clear indication of the government’s commitment to combating the adverse effects of rising prices. This substantial increase makes I Bonds an attractive investment option, especially for those concerned about the erosion of their purchasing power.

Investing in I Bonds offers several advantages. Firstly, the interest earned on I Bonds is exempt from state and local taxes, making them a tax-efficient option for many investors. Moreover, I Bonds are backed by the U.S. government, ensuring their stability and security. This government guarantee, coupled with the inflation protection, makes I Bonds a low-risk investment in uncertain economic times.

Additionally, I Bonds are accessible to a wide range of investors. They can be purchased directly from the U.S. Treasury’s website or via IRS tax refunds. The minimum investment is as low as $25, making it achievable for individuals with various financial capabilities. With a maximum annual purchase limit of $10,000 per Social Security Number, I Bonds are a flexible investment option that can be tailored to meet different needs.

It is essential to note that I Bonds come with certain restrictions to promote long-term investing. After the first year, an I Bond must be held for at least twelve months before it can be redeemed. If redeemed before five years, investors forfeit the interest earned in the last three months. Therefore, I Bonds are not recommended for those seeking short-term gains but rather for individuals with a long-term perspective.

The increased interest rate on I Bonds demonstrates the government’s intent to protect investors from the erosive effects of inflation. However, it is crucial to remember that investing should always be approached with a diversified strategy. While I Bonds offer an attractive fixed interest rate and protection against inflation, it is prudent to evaluate other investment options to establish a well-rounded portfolio.

In conclusion, the recent surge in inflation has led to the U.S. Treasury increasing the interest rate on I Bonds to an impressive 9.62% as of May 1, 2022. I Bonds provide a reliable hedge against inflation and offer several advantages, including stability, security, and tax efficiency. Nonetheless, investors should consider their long-term goals and ensure a diversified approach to investing. It is wise to consult with a financial advisor to assess the suitability of I Bonds and develop a comprehensive investment strategy that aligns with individual needs and risk tolerance.