May 17, 2022 | insights

What is an iBond?

By Kyle Wetters, CFP®
Co-Founder & Managing Partner
Tenet Wealth Partners

Series I savings bonds have been receiving a lot of attention lately.  Why?  With inflation surging, the current rate on an I bond is 9.62%! 

I bonds earn interest based on combining a fixed rate and a variable rate that’s adjusted based on inflation semiannually.  In addition to inflation protection, other attractive features include the safety of being backed by the U.S. government, interest compounds semiannually, and that the interest is exempt from state and local taxes. 

There are a few other things to keep in mind: (1) I bonds cannot be cashed out within 12 months of purchase. If cashed in before the bond is held 5 years, you lose the last 3 months of interest. (2) Individuals can only purchase $10,000 annually ($20,000 for a married couple), although an additional $5,000 can be purchased using your tax refund.  (3) I bonds must be purchased directly via the TreasuryDirect website (https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_ibuy.htm) and cannot be bought on your behalf by a Financial Advisor.  

  
For those looking for a safe alternative to cash that’s just sitting in a low yielding bank account, this could be an investment worth looking into if there’s not an immediate need to access the funds.  We’re happy to discuss if this could be a good solution for your specific situation. 

 
See the website below to read an informative article from bankrate.com with more information on iBonds.

https://www.bankrate.com/investing/inflation-government-series-i-savings-bonds/