We first wrote about I-Bonds in an article included with our November 2021 Newsletter
I-bonds are a great place to park some extra money if you are worried about the short-term prospects for the stock market and are nervous that increasing interest rates will cause bond funds to decline in value too.
Even at an interest rate of 4.3%, purchasing these US government bonds by setting up an account at www.treasurydirect.gov can still make sense. Here are the basics:
- Maximum purchase each calendar year: $10,000 in electronic I bonds + $5,000 in paper I bonds (which can be purchased using your federal tax overpayment if you have one)
- Can cash in after 1 year. (But if you cash before 5 years, you lose 3 months of interest.)
- Interest is compounded semi-annually.
More info about I-Bonds is available at: https://www.treasurydirect.gov/savings-bonds/i-bonds/.