FAQs
Bottom line. I bonds, with their inflation-adjusted return, safeguard the investor's purchasing power during periods of high inflation. On the other hand, EE Bonds offer predictable returns with a fixed-interest rate and a guaranteed doubling of value if held for 20 years.
What is the downside of an I bond? ›
The cons of investing in I-bonds
Another disadvantage to I-bonds is the fact that you have to purchase them directly from the Treasury via the website, TreasuryDirect.gov, which means you can't buy them through your brokerage with your other investments.
Is there a better investment than I bonds? ›
TIPS offer greater liquidity and the higher yearly limit allows you to stash far more cash in TIPS than I-bonds. If you're saving for education, I-bonds may be the way to go.
What are the disadvantages of TreasuryDirect? ›
Securities purchased through TreasuryDirect cannot be sold in the secondary market before they mature. This lack of liquidity could be a disadvantage for investors who may need to access their investment capital before the securities' maturity.
Why would anyone buy EE bonds? ›
Series EE savings bonds are a low-risk way to save money. They earn interest regularly for 30 years (or until you cash them if you do that before 30 years). For EE bonds you buy now, we guarantee that the bond will double in value in 20 years, even if we have to add money at 20 years to make that happen.
How much is a $50 series EE savings bond worth after 30 years? ›
How to get the most value from your savings bonds
| Face Value | Purchase Amount | 30-Year Value (Purchased May 1990) |
|---|
| $50 Bond | $100 | $207.36 |
| $100 Bond | $200 | $414.72 |
| $500 Bond | $400 | $1,036.80 |
| $1,000 Bond | $800 | $2,073.60 |
You can count on a Series I bond to hold its value; that is, the bond's redemption value will not decline.
Can you avoid tax on I bonds? ›
The only time I bonds may escape federal taxes is if the money is used to pay for higher education. Among the many criteria you must meet to take the tax exclusion, your income must be under certain limits and you must apply the money to a qualified institution the same year you redeem the bond.
How long should you hold series I bonds? ›
Can I cash it in before 30 years? You can cash in (redeem) your I bond after 12 months. However, if you cash in the bond in less than 5 years, you lose the last 3 months of interest. For example, if you cash in the bond after 18 months, you get the first 15 months of interest.
Are CDs better than I bonds? ›
As a result, CDs may be a slightly better investment than I bonds, assuming you stay on the short end of the maturity spectrum. Going longer exposes you to incremental illiquidity and inflation risk without corresponding yield compensation.
The 4.28% composite rate for I bonds issued from May 2024 through October 2024 applies for the first six months after the issue date. The composite rate combines a 1.30% fixed rate of return with the 2.96% annualized rate of inflation as measured by the Consumer Price Index for all Urban Consumers (CPI-U).
What is the safest bond to invest in? ›
Here are the best low-risk investments in June 2024:
Series I savings bonds. Treasury bills, notes, bonds and TIPS. Corporate bonds.
Does TreasuryDirect charge fees? ›
TreasuryDirect is free. There are no fees, no matter how much or how little you invest. You may hold both savings bonds and Treasury marketable securities in TreasuryDirect. Your securities in TreasuryDirect are electronic, so you don't have to worry about them getting lost, stolen, or damaged.
Is it better to buy Treasuries from broker or TreasuryDirect? ›
There are several ways to buy Treasuries. For many people, TreasuryDirect is a good option; however, retirement savers and investors who already have brokerage accounts are often better off buying bonds on the secondary market or with exchange-traded funds (ETFs).
What are the disadvantages of Treasury I bonds? ›
Cons: Rates are variable, there's a lockup period and early withdrawal penalty, and there's a limit to how much you can invest. Only taxable accounts are allowed to invest in I bonds (i.e., no IRAs or 401(k) plans).
Are Series I bonds still worth it? ›
I bond rates since 1998
Currently, the variable rate is 3.94% and the fixed rate is 1.3%, for a combined rounded yield of 5.27% for I bonds purchased between Nov. 1 and April 30. The 1.3% fixed rate "makes it very attractive" for investors who want to preserve purchasing power long term, according to Tumin.
Are I bonds a good investment in 2024? ›
Yes, 4.28% is the current inflation interest rate if you purchase the I Bonds before October 31, 2024. The previous I Bonds interest rate was 5.27% for November 2023 to April 2024. This also means that the composite rate is also an annualized 4.28% for the first 6 months that the bond is held.
Which bonds pay the most interest? ›
Top high-yield bond funds
- Vanguard High-Yield Corporate Fund (VWEHX)
- iShares iBoxx $ High Yield Corporate Bond ETF (HYG)
- JPMorgan BetaBuilders USD High Yield Corporate Bond ETF (BBHY)
- SPDR Portfolio High Yield Bond ETF (SPHY)
- VanEck High Yield Muni ETF (HYD)
How long should I wait to cash in a savings bond? It's a good idea to hang on to your bond for as long as possible, ideally until it matures, so you can take full advantage of compound and accrued interest.
