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Honored Social Butterfly

TIME TO ONCE AGAIN DIVE INTO I-BONDS

For a long time with our booming economy and low inflation - I-Bonds fell out of favor since they weren't paying much interest.  But now with inflation raging, the market being somewhat volatile I'm gonna go back to I-Bonds via Treasure Direct and buy as much as I can now - interest rate is really good right now.

 

What do your think ?  Anybody have any comments on this strategy ?  - good / bad or indifferent?  

 

 

It's Always Something . . . . Roseanna Roseannadanna
Bronze Conversationalist

@GailL1 I-Bonds are an excellent strategy that may be used to manage your short term (1 to 5 years) and longer term (greater than 5 years) fixed income/cash asset allocations. There are two components to the interest rate that you receive. The first is a fixed rate that continues for the duration of the I-Bond which is currently 0%. The second is a variable rate that changes every 6 months based on the Consumer Price Index (CPI) which starting May 1, 2022 is 9.62%. The 6 month interest rates are established every May and November. For example, I-Bonds bought in January 2020 will receive 7.12% for the period January 2022 through June 2022. Thereafter, that I-Bond will receive 9.62% for the period July  2022 through December 2022. That is approximately 8.4% for the 12 month period. The next interest rate will be established in October 2022 that will start in November 2022. However, for the above January purchase, the rate changes will occur every July and January (6 month intervals) until that I-Bond is redeemed or the maximum (30 years). In other words, holders of I- Bonds never miss interest rate changes (up or down) during each rolling 6 month period. So, you don't have to buy exactly in May and November of each year. FYI, on April 18, 2021, I posted a reply to Gorm50's topic entitled, "Any decent safe investment return ideas?" which appeared in Budgets and Savings. In that posting, I suggested I-Bonds since inflation was increasing each 6 month period. One of the contributing  factors was the price of gasoline which was increasing dramatically in 2021 (up 40% to 50%) due to the current Administration reducing the supply of oil. I don't know how to include that past posting with this posting. At any rate, I have suggested to friends and relatives to buy I-Bonds as much as they can afford. Currently there is a maximum purchase of $10,000 via Treasury Direct. Some folks over pay estimated federal taxes so they may buy up to another $5,000 via their federal tax return. In other words, receive an I-Bond instead of cash. Hope this helps.

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