I-bonds bought in May will have the new rate of 9.6% for the six months that follow. Here’s how to work around the $10,000 annual purchase limit per individual and $20,000 for a married couple.
With the release of March’s Consumer Price Index, we now know that a risk-free investment yielding 9.6% will be available as of May 2. I’m speaking, of course, about Series I savings bonds from the U.S. Treasury, which have lately been all the rage. To take advantage, all you need to do is open an account at TreasuryDirect.gov. Last year, it took me all of 10 minutes to open my account.I first wrote about I-bonds back in October 2021.
The same logic applies to a home equity line of credit . I’m generally opposed to using leverage, but it could make sense to borrow cash from your HELOC and then invest the money in an I-bond. According to Bankrate.com, many HELOC rates are still below 4%. Should the interest rate on your HELOC rise above that of your I-bond, simply sell the I-bond and use the proceeds to pay down your home loan.
Inflation is one of the great risks for retirees, and the longer the retirement, the greater the risk. An annual inflation rate of 5% over 13 years, for example, would cut the dollar’s purchasing power almost in half. Stocks provide some degree of inflation protection, but at the cost of sequence-of-return risk. I-bonds protect against both inflation and sequence risk.
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