A Note from Willy/Opportunity Alert
The new I Bonds rates came out this week and they look very attractive – especially compared to bank CD and money market rates.
I bonds were the boring unpopular cousin of US EE Savings bonds. First issued by the US Treasury in 1998 they have not enjoyed much popularity because the rate they pay is indexed to the rate of inflation, which of course has been very low the last 20 years.
As of this week, the current rate on I Bonds is 9.62%. (That is not a typo!)
I Bonds can be a great place for your emergency cash and a much higher rate alternative than a bank.
There are some restrictions; generally they must be held for 12 months, and if cashed in before 5 years, you may forfeit 3 months interest. The annual investment amount is limited to $10,000 per account (e.g. husband, wife, trust, etc.) See https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds.htm for more details, and instructions on how to set up an account.
My wife and I have set up accounts for some of our bank cash, and we may add some more next January if rates continue at this level. We can discuss the use of this cash alternative at our next review meeting, or of course please call us if you have questions before we meet.
Hope this idea might be helpful to you!
Please note, the return and principal value of bonds fluctuate with changes in market conditions. If bonds are not held to maturity, they may be worth more or less than their original value.