Series I Bonds: Explained!

UPDATE: Starting November 1st, 2022, and through May 1st, 2023, the NEW rate on Series I bonds is 6.89% (adjusted from 9.62%). Keep reading to learn more about what iBonds are.

Hello, my Dear Community!

After a recent Instagram Reel where I mentioned Series I Bonds as a vehicle to save money in the short term and get higher interest rates, I received many questions about these government bonds.

Here’s a quick post where I share the BASICS of Series I Bonds. Please note that this is by no means comprehensive. If you have specific questions, drop them in the comments below, and I’ll do my best to answer them.

Six facts about Series I Bonds:

#1 The Bonds are backed by the US-Government

#2 They have a variable interest rate which is set based on inflation. In other words, the higher the inflation, the higher the interest paid by these bonds (and vice versa)

#3 The rate is reset twice per year – on May 1st and November 1st of each calendar year.

#4 The current rate is 6.89% and is subject to change in May of 2023 (as noted).

#5 You can purchase these bonds for as little as $25 (if you buy them electronically via treasurydirect(dot)com) and as high as $10,000 per year. They do allow you to invest an additional $5K per year if you use money from your tax refund.

You MUST leave the money alone for at least one year (think of it as a 1-year CD).

You are free to take your money out after one year. However…

To get ALL of the interest on your money, you must leave the money invested in the bond for at least five years. If you “cash out” before the 5-year mark, you give up three months’ worth of interest.

Side note: Check out this very informative podcast episode from the amazing Suze Orman, where she explains how interest is calculated and how it is reflected in your account.

#6 The interest you earn from these bonds is exempt from state and local taxes. However, you will still be responsible for federal taxes.

If interested, you MUST purchase the Series I Bonds directly from the government website treasurydirect.gov. Emphasis on the .gov. There are tons of other bonds on that website. Make sure you are looking at the Series IBonds section specifically.

IMPORTANT: Beware of scammers or anyone else trying to “sell” you these bonds. They must be purchased from the government site!!!

And that’s all folks!

If you found this post helpful, please let me know and share it with those in your circle who can benefit.

Cheers to health and profits!

Mabel

Reminder: This post is NOT sponsored by ANYONE. It has been shared for educational purposes.

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