What are iBonds?
US Savings Bonds (Series I) are now offering over 9% APR over the next six months. That is an almost unbelievable guaranteed rate. We get asked frequently where to store money for a house purchase, or beyond your emergency fund.
You will not be able to withdraw this money in the first year. You will get the 9.62% for at least six months, and then an unknown amount for the next six months, indexed to inflation. You MUST hold the bond for at least twelve months with no possibility of withdrawal. If you withdraw between years 2 and 5, you will have to incur a 3-month interest penalty. After 30 years, the bond will stop earning any interest.
After six months (November 2022), you will earn a To-be-determined rate based on inflation, and you will be stuck with that rate for at least six months before you can withdraw. You will pay federal income taxes on the gains in the year when you sell the bond.
You can only buy $10,000 worth per calendar year. There are special exceptions for buying more I Bonds with your tax refund, which you can research yourself.
Where to purchase?
You must make an account at TreasuryDirect.gov to purchase the bonds. Warning: the website appears to have been last updated in 1998 with a clunky interface. Give yourself a few business days for the banking transaction to clear.
Happy Saving!
Okay, this is what you call a “hook up” for real!