john torrison president
The Coachmen's Clubhouse
  • Club History
  • Club Home
  • Club Members
  • Listen with Bill
    • Bill's History
  • Turntable
    • TT History
  • The FlipSide
  • Picturesque!
  • Skips Corner
  • Gulliver's Travels
  • The Club Pub
    • Sucks News
  • Boardroom

The Club PUBlication  04/04/2020

4/4/2022

0 Comments

 
Picture
Picture

​Now is a great time to invest in
i-Bonds
​

CHRIS FARRELL

PictureMininum investment . . . $25.


When it comes to saving money that you don’t need for at least one year there is a terrific high-rate, low-risk savings option available to the typical household: U.S. I-Bonds.

To be sure, the correct response to the promised combination of high-rate and lowrisk is usually to run — fast.

Not in this case.
​For one thing, the current rate on I-Bonds is a steep 7.12%. For another, I-Bonds are creditworthy since they are obligations of the U.S.Treasury. Finally, I-Bonds hedge against inflation measured by the Consumer Price Index (CPI).  Your savings in I-Bonds will maintain its purchasing power over time. Everyone these days is getting a lesson in the value of inflation-protected investment.

I’ve written about I-Bonds recently. I’m revisiting the topic for two reasons.

First, to remind readers that if you receive a refund on your taxes, you have the option to buy up to $5,000 worth of paper I-Bonds with the refund.

The other factor is that the rate on I-Bonds will adjust in May. The CPI for March will be released on April 12, and that is the only data left to determine the inflation adjustment for the next sixmonth cycle.

Even if the March CPI comes in flat from February — highly unlikely — the next adjustment will be 6.86% already, notes Harry Sit of the Finance Buff blog.  “So I think it’s almost certain the next adjustment will be at least 7%,” Sit wrote in an e-mail. “There’s a good chance it’ll be 8%-plus, and even 9%-plus is within the realm of possibilities.”

A quick primer: I-Bonds are purchased online from the U.S. Treasury at

                                    
treasurydirect.gov.  

The calendar year limit is $10,000 (plus up to $5,000 in paper I-Bonds with your tax refund). No commission is charged.

Your money is tax-sheltered until the bonds are redeemed.

You will pay federal income taxes on the gain, but I-Bonds are free of state and local taxes.

You can cash in your I-Bond investments after holding them for 12 months.

If you sell them before the investment is five years old, you will lose the last three months of interest.


(Sit offers a detailed tutorial on his website that I recommend: “How to Buy I Bonds (Series I Savings Bonds): Soup to Nuts.”) I-Bonds are great for longterm savers. They also work well as part of your emergency-savings fund once you get past the 12-month holding period.


Chris Farrell is senior economics contributor to American Public Media’s “Marketplace” and a commentator for Minnesota Public Radio.


​
0 Comments



Leave a Reply.

    Archives

    October 2023
    September 2023
    August 2023
    July 2023
    June 2023
    May 2023
    April 2023
    March 2023
    February 2023
    January 2023
    December 2022
    November 2022
    October 2022
    September 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018

    RSS Feed