With inflation hovering near 40-year highs, most investors are looking for investments that keep pace with rising prices. For many, a Series I Savings Bond is just the ticket. Unlike other government bonds that we usually think of as the most secure AAA credit and therefore, stodgy and low-yielding, I Bonds give investors a fixed rate of return plus an inflation-dictated rate of return.
The new combined rate is announced in May and November, locked in for 6 months. Bonds will pay that declared rate for the next 6 months. The current rate for bonds purchased this month (October 2022) is 9.62% until April 2023, when the newer rate will be applied for the next 6-month period.
I bonds are now big business. The Treasury sold more than $27 billion of I Bonds since last year. That's a more than 70-fold increase from 2020, when inflation hovered in the 1 percent range.1
Purchasing I Bonds through Treasurydirect.gov is simple. In fact, the site was recently redesigned, making now an excellent time to give it a look.2
Here’s how to get started.
1. Gather your info. Make sure you have the following close at hand: your taxpayer identification number (usually your Social Security number), current address, checking or savings account information, and email address.
2. Go to Treasurydirect.gov's account creation page. Navigate to the bottom of the page and select “Apply Now” on the left. This will begin your account creation journey. Next, you will choose between an Individual or Entity account. Select the Individual account type (the default option) and click “Submit.”
3. Enter your info. Using the information gathered in step 1, fill in the fields requested and check the box at the bottom to certify your Taxpayer Identification Number. Click “Submit.
4. Select a personalized image. Take some time here to select an image and caption you will remember. Think of this as a visual password for your account. Click “Submit.”
5. Secure your account. Select your password and security questions on this screen. Make sure the answers to your security questions are impossible to guess but easy to remember. Click “Submit” to move to the final step.
6. Check your email. Finally, look for your TreasuryDirect account number in your email. You’ll need this to log into your account later.3
You can begin purchasing I Bonds now that you’ve created your account. Here are a few things to keep in mind. I Bonds earn interest for 30 years unless you cash them in. You can do this after a year has passed from the time of purchase, but you'll lose the previous three months of interest. However, if you let them mature for five years or more, there is no penalty.
The maximum amount you can invest is $10,000 per person per year. A married couple can buy up to $20,000. Parents can create custodial accounts for children and then make a purchase. A person can invest up to $15,000 if they elect to get tax refunds in I Bonds.4
Questions about I Bonds or anything else financial? Feel free to reach out anytime.
1. CNBC.com, October 4, 2022