Inflation is raging and stock market is falling, Crypto is dropping like a rock. But there is a bright light. It is old and boring US Treasury Savings bonds. When I first read an article by my friend Igor Smolyanskiy, who is Certified Financial Planner and Investment Advisor, posted on LinkedIn almost a month ago, I could not believe that I never heard of it before. Specifically, he was talking about Series I Savings Bond.
What is it?
A savings bond that earns interest based on combining a fixed rate and an inflation rate. And precisely because it is indexed to inflation rate it now pays a whooping 9.62%. You can buy Series I bonds at that rate through October 2022
Benefits and limitations
- You only pay tax when you sell it and you only need to pay Federal taxes as it is exempt from State and local taxes
- Using the money for higher education may keep you from paying federal income tax on your interest. So it would be completely tax free.
- You only pay tax when you sell it and you only need to pay Federal taxes as it is exempt from State and local taxes
- You have to hold for at least 12 months before selling.
- You can can only buy $10,000 worth per year per person but you can also gift it.
- Best part is that it is guaranteed by US Government which makes them practically risk-free.
If you want to learn more
Official Information https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds.htm
Tax Advantages https://www.thebalance.com/tax-advantages-of-series-i-savings-bonds-357552