You may have heard people talking “I Bonds” all over social media the past few years, and there’s a reason for that—they’re getting a lot of buzz! But what exactly is an I Bond? Let’s break it down in simple terms.
What Are I Bonds?
A Series I Bond is a type of savings bond issued by the U.S. government. Essentially, when you buy an I Bond, you’re lending your money to the U.S. government, and in return, they pay you interest.
Here’s the cool part: I Bonds have a built-in protection against inflation. That means the interest rate adjusts over time based on inflation, making them a safe way to grow your money, especially when prices are rising fast.
How Do I Bonds Work?
I Bonds earn interest in two parts:
- Fixed Rate – This part of the interest rate stays the same for the life of the bond.
- Inflation Rate – This part changes every six months based on the current inflation rate.
The U.S. Treasury recalculates this rate in May and November, so your bond will adjust to reflect what’s going on in the economy. The good news? Even if inflation goes down, the rate on your I Bond will never fall below zero. You’ll always earn something on your investment.
Why Have I Bonds Become So Popular?
In recent years, inflation has been hitting record highs. Prices of everyday things like groceries and gas have been climbing, and people are looking for ways to protect their money from losing value. That’s where I Bonds come in. They’ve become a hot topic because they’re offering much higher interest rates than what you’d get with a regular savings account.
In fact, at one point in 2022, I Bonds were offering a 9.62% annual return! It’s easy to see why people get excited about them—great returns, low risk, and inflation protection.
How Do I Buy I Bonds?
You can purchase I Bonds directly from the U.S. Treasury’s website, Treasury Direct. You can buy them for yourself or even as a gift for someone else. You can purchase as little as $25 and up to $10,000 per year. Check out our walkthrough on TikTok.
And here’s a fun fact: you can even buy I Bonds for kids. If you want to teach your children or younger relatives about saving and investing, this could be a great tool.
Why Should You Consider I Bonds?
If you’re worried about inflation eating away at your savings, I Bonds might be a smart choice. They don’t offer the high returns of stocks but are considered safer. I Bonds provide steady growth adjusted for inflation, making them a great option if you’re looking for a more predictable way to build savings over time.
So, if you’re new to investing or just want to balance your portfolio with something more stable, I Bonds might be worth considering.
Final Thoughts: I Bonds Can Be A Smart Option
I Bonds are a reliable way to protect your money from inflation while earning a decent return. Whether you’re just starting out or looking for safer investments to balance your portfolio, they offer a great mix of low risk and decent rewards backed by the U.S.government.
Disclaimer: this is not legal, tax, accounting, investment nor other professional advice. Consult an advisor and do your own research for your individual situation.
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