There is no risk that you will lose money in the bond, only the interest you earn on the bond. You essentially earn $9.62 for every $100 you invest in an I Bond.Ī great reason to buy an I Bond is if you have a savings goal you’re trying to achieve within 1-5 years, like buying a home, taking a big vacation, planning a wedding, or sending someone to college. That means I could buy bonds up to that amount, my husband could, and we could buy the same amount for our son each calendar year. On the flip side, if you have a much smaller amount to invest, it’s important to ask yourself if it’s worth the hassle. You could get around that cap by buying bonds for different people in your household. The maximum contribution each year is $10,000.They can be pretty difficult to buy, with an outdated website and some complicated rules (more on that later).This is fine if inflation continues to increase (for your I Bond, not for the rest of your wallet unfortunately!), but there is a risk that interest rate could dramatically decrease while you’re invested. The interest rate changes every six months, and you’re subject to whatever the interest rate is in the next period.If you withdraw the bond before five years, you lose the last three months of interest.If that gives you any pause, the I Bond is most likely not for you. You cannot withdraw the money at all within the first year. The money is trapped for the first year. With an I Bond, you have to leave the money in the bond for at least one year.“What’s the downside?” What They Don’t Tell You About I Bonds “OK, but should we buy them?” Dyalekt asked. This means when inflation is low, the I Bond interest rate is low, and when inflation is higher-as we’re seeing with rising gas, food, and consumer staples prices-the interest rate for the I Bond also goes up.
#FINEPRINT 9 SERIAL NUMBER SERIES#
I ran upstairs to tell my husband and podcast co-host, Dyalekt, and he immediately said, “Let’s buy some I Bonds.” But then immediately added, “Wait, what’s an I Bond?”Īn I Bond (or Series I Savings Bond if we want to be official-official) is a government-issued Treasury bond where the interest rate is tied to inflation. “Nice! I knew it was going to go up but not that high,” another planner wrote back. “Did everyone see? The rate for I Bonds went up to a record 9.62% yesterday,” one of our financial planners said. There was a frenzy in our Slack channel at Brunch & Budget when the I Bonds rate was announced in May. For more information, see How We Make Money. Some links on this page - clearly marked - may take you to a partner website and may result in us earning a referral commission. We want to help you make more informed decisions.
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