Got an Eye for I Bonds?

Got an Eye for I Bonds?

What is up with I Bonds?


If you read or watch any current news about the markets or the economy, you’ve heard that inflation rates are high, stocks are down, and bonds had a tough first quarter. In all of this negative news, many people are asking me about I bonds –“ is it true they are paying 9.62%”?  The answer to that question is, yes, currently you can buy an I bond on Treasury Direct and it is paying 9.62% through October of 2022.  There are some other important pieces of information to know.

  • An investor is capped at purchasing $10,000 of I bonds.
  • The bonds are made up of two parts, an annual interest rate and a semiannual inflation rate. The annual interest rate today is 0%, the semi-annual inflation rate is 4.81% – multiply the that by two and you get that shiny 9.62% APY.
  • The US Treasury’s semi-annual inflation rates change every 6 months (May and November), so the rate on your bond will also change twice a year. The fixed rate (0% today) is determined at issue and applies for the life of the bond.
  • The term on the bond is 5 years, and if cash it out after year-one but before year-five, you’ll be paying a three month interest penalty.
  • Click here for a full details and terms of the I Bonds on Treasury Direct.

In the volatility of the current market, a 9.62% return may be very attractive.  That said, the process of creating a new Treasury Direct account and keeping an eye on it every six months can be a deterrent for those who prefer to set a plan and let it work for the long-term.  For families who have built a strong emergency fund, this could be a good vehicle for a portion of that fund.  The 12-month lock up means you need to be confident you won’t need those funds in the next year.  The $10,000 cap may also be a limitation to those who have a desire to invest a much higher dollar amount into this strategy. If you have an interest in learning more about how I Bonds may fit into your portfolio strategy, or if you’d like to talk about some other alternatives for your investments, we would welcome your call.






This content is developed from sources believed to be providing accurate information, and provided by ReFrame Wealth, LLC. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.

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