Tweets like this one:
Inflation is going to continuing cranking up no matter what. Buy some I-Bonds if you have savings, people, up to $10,000.— Brendon Carpenter 🇺🇸 (@PinkoPatriot) April 29, 2022
They’re inflation-proof. 💸https://t.co/KZqXGZP8wz
And news reports like this: https://www.cnbc.com/2022/05/02/i-bonds-to-deliver-a-record-9point62percent-interest-for-the-next-six-months.html have attracted our attention recently.
Are you familiar with the Series I Savings Bond? We decided to do a bit of research on them as these Treasury Bonds are currently offering a 9.62% return, which is as the name suggests a protection against our 8% inflation rate. I-Bonds were released about 25 years ago as protection against inflation and are tied to the inflation rate, specifically, the Consumer Price Index for all Urban Consumers (CPI-U).
Here is an authentic United States Department of Treasury Bond sold through: https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_ibuy.htm
Technically, it is based on two different rates, the first is a fixed rate which is currently set at zero. The second is a variable rate set twice a year, May and October, and is based on inflation rates. The Department of Treasury just met and set the variable rate at 9.62. This rate will be guaranteed for the first six months, but the next meeting is in late October when it is unlikely that inflation will be much lower, so there is still a likelihood of continued high rates.
Unlike the more common EE Bonds that can only double over 20 years, these bonds will apply interest at the end of every six-month period. Your interest is applied to the principal so your principal will continue to increase every six months for 30 years or until you cash out the bonds.
At a time when inflation is hitting four-decade highs and the stock market is hitting record lows, it might be time to consider the Series I-Bond or Inflation Bond. We warned, there are limits.
In a calendar year, you can acquire:
- up to $10,000 in electronic I bonds in TreasuryDirect
- up to $5,000 in paper I bonds using your federal income tax refund
- The limits apply separately, meaning you could acquire up to $15,000 in I bonds in a calendar year
- Bonds you buy for yourself and bonds you receive as gifts or via transfers count toward the limit. Two exceptions:
- If a bond is transferred to you due to the death of the original owner, the amount doesn’t count toward your limit
- If you own a paper bond issued before 2008, you can convert it to an electronic bond in your account in TreasuryDirect regardless of the amount of the bond. (The annual limit before 2008 was greater than today’s limit of $10,000.)
And yes, you can gift them. Usual gift tax limits apply.