What Is An I bond?

What Is An I Bond?

An I Bond is a government-issued bond you can only purchase straight from the treasury’s website. It’s a nearly risk-free investment that acts as a type of savings instrument that tracks cash in line with inflation. If inflation is high, the I Bond interest rate is high. If it is low, the I Bond interest rate is low.

What kind of return can I expect from I bonds?

Interest rate return on the I Bond = a fixed interest rate (set when you buy the bond) + variable interest rate (set by treasury every 6 months). This rate is compounded every 6 months. Currently, I Bonds issued from May 2022 through October 2022 have an interest rate of 9.62%.

Are there any rules associated with them?

You will need to hold the I Bond for at least 1 year. If you cash out before 5 years, you will lose the previous 3 months of interest. If you were to hold the bond for 18 months, you would only receive 15 months of interest. The maximum amount you can buy in a calendar year is $10,000 of electric I Bonds ($20,000 per married couple). You can buy an additional $5,000 of paper I Bonds using your tax refund.

Who should be interested in I Bonds?

This is a good option for people who may not need access to the funds for the next 1-5 years. Any longer-term investment is better placed in other options as the I bond’s interest will decrease as inflation decreases.

How to set up an account on treasurydirect.com:       https://www.treasurydirect.gov/tdhome.htm

1. Go to the individual’s tab at the top of the page.
2. Click on my accounts.
3. Click “Open an Account”.
4. Click “Apply Now”.
5. Click “Individual” then Submit.
6. Fill out your personal information and bank information then click submit.
7. Set up security questions and password.
8. An account number will then be sent to your email. Use this account number to log in.
9. You will be sent another email with a “One time password” which you will use to log in.

How to buy the I bonds:

1. Once you are inside your account at your dashboard click the “Buy Direct” tab on the top of the page.
2. Select the “Series I” savings bond.
3. Next, enter the amount you wish to purchase ($25 – $10,000).
   1. The maximum amount you can buy in a calendar year is $10,000 of electronic I Bonds.
4. Click submit, then submit again.
5. Once the purchase is complete, it should take 1 business day for the purchase to show up in your account.
6. The process is complete!