What are I Bonds?

I Bonds, otherwise known as ‘inflation-protected’ bonds, are investments offered by the United States Treasury. They are designed to protect purchasers from rising inflation, as the bond’s interest rate is adjusted every six months by the Consumer Price Index. When inflation increases, so does the interest rate, and vice versa. Because they are Treasury-backed, they are considered one of the safest investments around.

Benefits of I Bonds

I Bonds offer a number of benefits to potential investors. Firstly, they provide an inflation-protection. As the bond’s interest rate is adjusted every six months to keep up with the Consumer Price Index, investors can be assured that their money will not lose value with an I Bond. Additionally, I Bonds offer tax benefits. Interest earned from I Bonds is exempt from both federal and state taxes, meaning investors do not need to pay any taxes on their bond earnings. Finally, I Bonds can be sold after 12 months without penalty, meaning the the investor is able to access their money before the bond’s maturity date if necessary.

How to Buy I Bonds

I Bonds can be purchased online, and the application process is fairly straightforward. Investors must specify the amount of bonds they wish to purchase (minimum of $25) as well as provide their bank account details for the payment to be taken from. After this, the funds will be transferred to the Treasury, and the bonds will be issued within one business day.

Overall, I Bonds are an attractive investment option for those looking to protect their savings from inflation. While they may not offer high return rates at the moment, they offer the security of a government-backed investment and the benefit of tax-free earnings. Additionally, the relatively low minimum purchase amount and the 12 month sell-by-date make them an accessible option for potential investors.