I-Bonds: What You Need to Know


In times of surging inflation, relying solely on traditional savings avenues and bonds might not yield optimal results. This is why investors seek higher-yield, lower-risk options. The U.S. government’s Series I Savings Bonds, also known as “I-Bonds,” has emerged as a potential solution.

I-Bonds, issued by the U.S. Treasury, aim to shield investors from inflation’s erosive effects. These Bonds offer a guaranteed return pegged to inflation and deliver tax advantages. While individuals and trusts can purchase I-Bonds, they’re not accessible to businesses.

The key feature of I-Bonds lies in their inflation-adjusted nature. As inflation fluctuates, these Bonds recalibrate their inflation rate, safeguarding the invested money’s purchasing power.

Primarily, I-Bonds thrive as long-term investments. The longer they are held, the more robust the returns. It is not a short-term investment avenue but serves as a secure shelter from market volatility, gradually nurturing wealth.

Maturing in 30 years, I-Bonds culminate in the repayment of principal and interest. Interest accrues over a 20-year original maturity period, followed by an additional 10-year extension. Exiting before a 5-year period incurs a three-month interest penalty.

The interest rate earned by an I-Bond comprises a fixed rate and an inflation rate. While the fixed rate remains constant, the inflation rate, linked to the consumer price index, adjusts every six months. The U.S. Treasury amalgamates these rates, determining the composite rate biannually, effective on May 1st and November 1st. Currently, I-Bonds presents a compelling composite rate of 5.27% until April 30, 2024.

Although I-Bonds accrue monthly interest, the compounding occurs semi-annually. Investors only receive the earned interest upon cashing out.

For those seeking a fortress against inflation’s impact and considering long-term wealth growth, I-Bonds serve as a stable and lucrative investment avenue.


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