What type of savings bonds are the best to buy?
Jay B asked:
I looked into the treasury direct website and I see that the I-Bonds have a 4.84% interest rate, this seems like a good rate. Is this the best type of bond I can purchase, if not which one is best and why. I will choose best answer for the best explanation.
I looked into the treasury direct website and I see that the I-Bonds have a 4.84% interest rate, this seems like a good rate. Is this the best type of bond I can purchase, if not which one is best and why. I will choose best answer for the best explanation.
EE is a better investment
Your choices are series I or series EE.
Series I bonds are based on the inflation rate + extra. I think they take the rate of inflation and add 0.6% or so to it. With these, you are always guaranteed to make more than inflation.
Series EE bonds are trickier. Their rates are determined using a complicated formula. They are purchased at half of face value and achieve face value in ~7 years (depending on the rate).
Both are very stable, but you should remember they’re long term, multiple year investments.
I like savings bonds because they have a pretty decent rate. I used to have a lot of savings bonds and kept track of them on this savings bong calculator website:
It’s a lot of fun to go on and update the value of your inventory every month.
I bonds are indexed to inflation. Not only that but you do not have to pay taxes until you cash them in. They are certainly a better deal than EE bonds which are not indexed to anything. I expect that inflation is going to be the main concern on everybodies minds for the next several years. But bear this in mind. The I bonds currently pay 4.84% and the current inflation rate is better than 6%. They are not all that great a deal. But I suppose everthing is relative. Investors in equities are currently in negative territory to the tune of -11% for the most part.