Never heard of these. Seems promising to park some cash as a conservative option.
https://www.wsj.com/articles/i-bonds-the-safe-high-return-trade-hiding-in-plain-sight-11622213324
https://www.wsj.com/articles/i-bonds-the-safe-high-return-trade-hiding-in-plain-sight-11622213324
Quote:
I bonds were conceived to provide primarily small savers with a positive long-term return after inflation. Their yield consists of a fixed rate for the 30-year life of the bond and an inflation rate, which adjusts semiannually. The current 3.54% applies to I bonds issued until Nov. 1, 2021 and will reset every six months unless the official government rate of inflation stays constant.
W hat if interest rates or inflation head lower? Yes, the yield can decline. But, unlike with Treasury inflation-protected securities, or TIPS, the yield on I bonds can never go below zero. So they protect against both inflation and deflation, which is pretty amazing.
Quote:
Interest on I bonds is exempt from state and local income tax. In confiscatory states like California, Hawaii, Minnesota, New York and Oregon, a household with $400,000 in taxable income would have to earn roughly 4% on a taxable asset to equal today's after-tax I-bond return if rates don't change.
Quote:
I bonds aren't as liquid as a bank account, money fund or Treasury bill. You can't cash out until you've held for 12 months. If you redeem within the first five years, you'll forfeit the last three months of interest. But they're as liquid as other 30-year bondsand, if you sell after the first five years, your full recovery of principal and your ability to match or outpace inflation are both guaranteed.
