Introduction to I Bonds

I Bonds are issued by the United States Treasury. They earn interest and are protected from inflation.

Interest Rate #

You cannot lose money as the interest rate can never go below 0%. They are low-risk.

The interest rate on new I Bonds is 7.12 percent. You can buy I Bonds at that rate through April 2022.

I Bonds interest rate has 2 components: fixed rate and an inflation adjustment. The inflation adjustment in Nov 2021 was 3.56%. One year back this was only 0.84%.

The inflation adjustment is adjusted every 6 months. So the interest rate rises with inflation.

Tax Deferred #

The interest earned on I Bonds is not taxed till you redeem them. So you can defer paying taxes on them for upto 30 years.

You could buy I Bonds when you are in a high tax bracket and redeeem them when you are in a low tax bracket. For example, when you are retired or between jobs.