Home Fixed interest I bonds pay close to 10%. Should I buy?

I bonds pay close to 10%. Should I buy?


Q. What do you think of government bonds I?

— Potential investor

A. I’m reading are hot right now, thanks to the higher rate of inflation.

You can buy all kinds of Treasury securities by logging online at treasurydirect.gov.

I bonds are currently experiencing a high interest rate due to the high consumer price index (CPI), at around 9.6%, said Debra Ohstrom, Chartered Financial Analyst and Financial Educator.

There are two parts to the calculation of the interest rate on I Bonds.

The first part is a “fixed rate” based on current interest rates. The second component is an inflation rate.

It is important to note the rate on I’m reading may change every 6 months depending on current interest rates and inflation readings.

Also, individuals are limited to buying $10,000 of I Bonds in any given year (unless you buy some when you file your tax return).

“Keep in mind that you have to hold an I bond for at least a year and if you hold it for less than five years, you can lose three months of income when cashing out,” Ohstrom said. “Your interest earned is added to the value of the bond on the first of each month and compounded semi-annually. This means it pays out no quarterly income streams if you are looking for cash flow.

Send your questions to [email protected].

Karin Price Mueller writes the Bamboos column for NJ Advance Media and is the founder of NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJMoneyHelp. To find NJMoneyHelp on Facebook. Register for NJMoneyHelp.comit is weekly e-newsletter.