U.S. Government I Bonds – Current Yield 9.62% until October 2022.

I bonds are a type of U.S. savings bond designed to protect the value of your cash from inflation. With inflation at four-decade highs, investors are ever more interested in higher-yielding, lower-risk investments, and these fit the bill.

The current interest rate on I bonds is 9.62%. That rate is applied for the next six months, until October 2022.

Understanding I Bonds

I bonds are safe investments issued by the U.S. Treasury to protect your money from losing value due to inflation. Interest rates on I bonds are adjusted semi annually to keep pace with rising prices. In addition, series I bonds are exempt from state and local income taxes, which makes them an even better low-risk investment for investors who live in high-tax states and cities.

What is the maximum amount an Investor can purchase?

Investors can buy up to $10,000 worth of I bonds annually through the government’s TreasuryDirect website. You can purchase another $5,000 with your tax refund, upping the annual total purchase amount of series I bonds to $15,000 per person.

When Do I Bonds Mature?

I bonds have a maturity of 30 years, I bonds cannot be cashed for one year after purchase. If a bond is cashed in year two through five after purchase, the prior three months of interest are forfeited.

They can also be cashed out after 5 years with no penalty. They carry a 20-year original maturity period immediately followed by a 10-year extended maturity period. There are several ownership caveats with series I bonds:

How Are I Bonds Taxed?

I bonds are exempt from state and municipal, but not federal, income taxes. If they’re used to pay for qualified higher education expenses, however, I bonds may be completely tax-exempt. Owners can pay taxes on the interest earned annually, at maturity or when the bond is cashed. The only state tax due would be estate or inheritance taxes.

 What Are the Benefits of I Bonds?

The chief benefit of I bonds is that they protect the purchasing power of your cash from inflation. When prices rise across the economy, they erode how much the same amount of dollars can buy, but safe investments like I bonds can help you maintain the value of the cash component of your asset allocation.

Any security offered by the U.S. Treasury has nearly zero risk of default, and, as noted above, I bonds offer attractive tax benefits. Their interest payments, for instance, are exempt from state and local taxes, and they may be entirely tax free if used to pay for college tuition and fees at an eligible institution.

For more information on how to Purchase an I Bond, click the link below.  401kquoto.com/

 Individual – Series I Savings Bonds (treasurydirect.gov)

Learn More on how 401kQuote.com Can Assist you with I Bonds.

Series I bonds are guaranteed by the US government as to the timely payment of principal and interest and offer a fixed rate of return and fixed principal value. Minimum term of ownership applies. Early redemption penalties may apply. Not available through LPL Financial.