Canon Capital Wealth Management would like to share an opportunity where you can purchase Series I Savings bonds directly from the U.S. Treasury as an additional savings vehicle.
With the stock market down and inflation up, I-Bonds are becoming a very popular savings vehicle due to the high-interest rate being offered. The current interest rate is a whopping 9.62% and savers can lock in this rate for a 6-month period if they purchase on or before October 28, 2022. Here are the details:
Series I savings bonds (AKA “I-Bonds”) are issued by the U.S. Treasury and have an interest rate that’s meant to move in a correlated fashion with the rate of inflation. This rate is a combination of two different rates: a fixed rate and an inflation rate. The fixed rate remains the same throughout the bond’s life. The inflation rate however changes every 6 months to make sure it accurately reflects the current inflationary environment.
The current rate that these bonds are paying is 9.62%, but the rate for the next 6-month period will most likely be reduced closer to 6-7%. However, it’s not too late to get the higher rate. For anyone who purchases I-Bonds by October 28, the 9.62% rate will be locked-in for 6 months and will automatically adjust for the following 6 months. If the rate is around 6.5% as expected, that would effectively be an 8% annualized return over a 12-month period.
It’s worth noting a few drawbacks to I-Bonds. First, they can only be purchased directly by the individual at the TreasuryDirect website after creating an account. Second, the maximum amount that you can purchase through the website is $10,000 per year per entity (i.e. an individual, business). A married couple could therefore purchase $20,000 between the two of them. Third, there is a holding period requirement of at least 1 year.
For a more complete list of features, click here to be directed to the U.S. Treasury’s page on I-Bonds.
For those individuals who are interested in purchasing, click here for a step-by-step guide on how to get started.
If you are interested in exploring how I-bonds can be integrated into a wholistic financial plan, we would be happy to help. Please give us a call at 215-723-4881 and we will help you navigate these troubling financial times.