I Bonds are US Savings Bonds that provide a real rate of return based on inflation. Learn how I Bonds function, the I Bond current rate how to buy bonds, and where savings bonds fit into your savings goals. Visit Ibonds.info.

IBonds.info - US Series I Savings Bonds Current Ibond Rate

What are I Bonds?

Series I savings bonds are US government savings bonds designed to offer a bond product guaranteed a real rate of return. With I Bonds, the protection from loss of value comes from the inflation component of the rate. Unlike municipal or corporate bonds, US Treasury bonds do not have an inherent risk of the bond-issuer defaulting. This means that an I Bond will always have a real return and there is virtually no risk involved.

I Bond Terms

The US Treasury considers I Bonds to be a long term investment. As such, there are several limitations on I Bonds that must be considered when analyzing your financial goals. I Bonds have a one year minimum hold time in which the bond can not be redeemed. Additionally, bonds are subject to a 3 month interest penalty if the bond is redeemed within 5 years of the issue date. Similar to other US Treasury Bonds, I Bonds continue to earn interest for 30 years. After that time, the matured bond is worth the face value plus the interest collected over that time.

I Bond Risk

Unlike stocks, corporate bonds, or other equities, I Bonds are low risk investments. The inflation component of the I Bond’s rate protects the earning power of the bond against rises in inflation over time. Even in the event of deflation, I Bonds are guaranteed to not lose value. Because I Bonds are backed by the federal government, risks associated with the issuer defaulting are extremely slim (if the government defaults, you have many more problems to worry about than your I Bonds).

Asset Risks

Compared to Other Products

EE/E Series Bonds offer different benefits based on their year of issuance, so make sure you research the correct type of EE/E Bond when comparing against I Bonds. EE Bonds purchased after May 2005 offer a fixed rate of interest based on current market rates. Many people equate current EE Bonds with Certificates of Deposit (CD) with 30 year terms. EE Bonds are also not protected against inflation, meaning the interest rate could be higher than the rate of the bond. Unlike I Bonds, EE Bonds are purchased at half the face value. Another Treasury product designed to protect from inflation, Treasury Inflation-Protected Securities (TIPS), and can be purchased or sold at auction. TIPS are sold in terms of 5, 10, or 20 years but require a $100 minimum purchase.



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