Written by Coleman Showalter
Imagine being able to generate just under 10% return on an investment backed by the full faith and credit of the United States Government. Many people have never heard of a particular type of bond, known as a Series I Savings Bond, which is issued by the United States Treasury. Series I Savings Bonds have recently become a hot topic due to the extreme inflation pressures we have been experiencing for the past year.
The yield on the bond is determined based on the current inflation rate, so as a result of high inflation, the Series I Savings Bonds currently yield 9.62%. The rate changes twice per year, and you continue to earn interest for up to 30 years, unless you decide to cash in the bond to get your money back. However, it is important to keep in mind that you cannot cash in the bond until you have held it for at least one year.
Each year, you can purchase up to $10,000 of Series I Savings Bonds electronically at https://www.treasurydirect.gov/indiv/myaccount/myaccount_treasurydirect.htm . Paper bonds are also available if desired, and they can also be purchased using up to $5,000 of your tax refund. The $10,000 and $5,000 limits apply separately to each Social Security Number, so your spouse would also be eligible to purchase another $10,000 and $5,000 if that fits into your financial plan. The current rate of 9.62% is only available through October 2022, when the rate will reset. Given that inflation is still quite high, Series I Savings Bonds might be something worth keeping your eye on.