You might’ve just laughed, so why the Series I Savings Bonds?

The Series I Savings Bond is issued by the U.S. Department of the Treasury. They are inflation-protected and nearly risk-free investments that, through April 2022, are paying a 7.12% annual rate of interest.

7.12% interest risk-free? What’s the catch?

The catch is that there are two parts to a Series I Savings Bond’s returns: a fixed rate and a variable rate. Currently, the fixed rate is at zero percent and the variable rate, which changes every six months based on the Consumer Price Index, is at 7.12 percent.

This means that the bondholders may have rate changes twice a year.

The value of a Series I Savings Bond doesn’t decline, and rates won’t drop below zero. If inflation continues that rate may go up even further, so they make a great investment if you believe inflation is with us for the long-term.

I mention long-term because Series I Savings Bond investors can’t access the funds for 12 months, and if they redeem the bond within the first five years, they lose the last three months of interest.

How many of these bonds can I purchase?

One of the limitations of the Series I Savings Bond is that individual investors can’t buy more than $10,000 electronically per year.  An additional $5,000 can be “purchased” as paper bonds from a refund on your tax return.  

But there is a workaround – couples can electronically purchase $10,000 each and a family of four can purchase up to $40,000 a year as long as they are in each individual’s name. 

The additional $5,000 that can be “purchased” using your tax return will be a paper bond that will be mailed to you.  That limit is per tax return so if you are a family of four and IF you will be getting a refund, you can purchase an additional $5,000 in total with your tax refund – not $5,000 per person.   Once you receive the paper bonds in the mail, you can convert to electronic bonds through Treasury Direct.

I eat my own cooking!

My family and I maxed out our Series I Savings bond purchases for December and we already maxed out our 2022 purchase….

…and there are several additional strategies I’m using to reallocate my family and clients’ portfolios in anticipation of continued inflation.

To find out, give me a call – (561) 288-1160

I’ll be happy to discuss how you can protect your portfolio from inflation, the Biden administration, and your current investment advisor who may not share your politically conservative beliefs.

If you would like to reserve some time to have a conversation about current market conditions, follow the button below and pick out a time that works best for you.

I look forward to speaking with you!