What’s the safest investment that you can make right now in this time of high inflation and low economic growth? It is to buy an I bond. Buying an I bond is a high reward low risk play. What are I bonds? I bonds are government savings bonds that earn interest based on a fixed rate and the rate of inflation. So, why are I bonds such a good deal right now?
The Best Investment That You Can Make Right Now Is To Purchase I Bonds
I Bonds Are Guaranteed by the Government
I bonds are incredibly low risk because they are backed by the full faith and credit of the United States government. The United States has never defaulted on paying back its debtors who hold savings bonds. The only risk of receiving your principal back is for the United States government to fail to pay its debts which makes savings bonds the safest investments that you can find.
I Bonds Benefit From High Rates of Inflation
You may hate paying more money at the gas pump and more money for groceries but there is an upside to that. While inflation may mean paying more for goods and services; inflation also means higher interest rates on I Bonds since the payment rate is pegged to inflation.
I Bonds Are Paying High Interest Rates
I bonds are currently paying 7,12% in interest for the next six months. The interest rate reset in the beginning of April and will pay investors this rate through November. Inflation is likely to stay high for the next year so I bonds are a good investment for the next 12 months at least.
I Bonds Are Cheap
While corporate bonds are sold in denominations of $1,000; I bonds have low minimum purchase amounts. You don’t need thousands of dollars to buy I bonds. I bonds can be purchased with as little as $25. You can buy an I bond for just $25. You can buy as many as you want up to a maximum of $10,000 per year.
I Bonds Can Be Purchased Online
You no longer have to go to a bank or financial institution to purchase a savings bonds. You can buy I Bonds right from the comfort of your own home on the US Government’s website at treasurydirect.gov
I Bonds Can Be Held For The Short Term Or Long Term
I bonds offer flexibility. I Bonds earn interest for a 30 year time period unless you cash them in. You can sell an I Bond anytime after holding one for a minimum of 12 months. If you sell a bond before five years, you forfeit the last three months of interest earned.
I Bonds Are Tax Free
I Bonds are free from and state and local income tax free. The only taxes that you pay on I Bonds are at the federal level when you redeem the bonds.