Episode 096 

Using Series I Bonds to Boost Your Savings and Investment Strategy 

The average savings account in the U.S. is currently paying 0.06% interest. Want to know of other places where you can learn a higher interest? Series I Bonds may be a great option.  

Series I Bonds 
Did you know you can buy an interest-bearing U.S. government savings bond? This is exactly what a Series I Bond is and it earns a combined fixed interest rate plus a variable inflation rate. If you currently have extra cash and feel investing in the market is not for you, maybe consider a Series I Bond. Some argue they’d rather leave their money in the bank, but to be frank, most banks don’t currently offer high interest rates. In fact, bonds issued from November 2021 through April 2022 will allow you to earn a 7.12% annualized interest rate. This means you have the potential to earn more since the average bank interest rate for a checking account is .06%. By the way, these bonds earn interest for a max of 30 years, or up until they’re cashed. On one hand they can only be cashed after one year, on the other hand, if cashed before five years then you lose the previous three months of interest. The interest changes every six months, so keep in mind that if inflation goes down you will not earn as much. Even if inflation went down to zero, you’d get 7.12% for the first six months and then 0% for the next six months, which is 3.56% for the year, still higher than most banks are currently paying.  
 
Things to Consider 
Series I Bonds should be thought of as helping us with our saving and investing strategy. It’s possible to make more money in the stock market, however, unlike the market, a Series I Bond will not fluctuate dramatically, putting your money at risk. This type of bond works well for someone who needs to earn interest within a short to midterm period and for those who would like an opportunity to further diversify their portfolios. They can be purchased online via TreasuryDirect for a minimum of $25 and a maximum of $10,000 total each calendar year. This opens up a year-end planning opportunity you can take advantage of. What this means is, you can earn a good amount of interest if you have the money to buy the max of $10,000 before the year ends, and any other additional amount as soon as the new year starts. You can find more information by visiting the TreasuryDirect website.  Be sure to speak with your financial advisor to see if Series I Bonds are a good strategy for you and as always feel free to reach out with any questions. You can schedule a consultation with me by clicking here.  

Notes: 

In this episode, Luis talks about the following and more: 

  • What is a Series I Bond? 
  • How I Bonds Work 
  • Things to consider before you buy an I Bond 
  • Year-end planning opportunity you can take advantage of 

Resources: