What You Need to Know About Savings Bonds and Inflation

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There are some details to keep in mind about I ties.

First, there is a limit to how much you can invest. You can purchase digital I bonds for up to $10,000 per person per year. Treasury Direct, a website operated by the Bureau of Financial Services, part of the Department of the Treasury. (Saving bonds can no longer be purchased from bank branches.)

You can also buy an extra $5,000 of paper I bonds each year using your income tax return. (The only way to buy traditional, non-electronic savings bonds is to buy them with a tax refund).

So a couple can buy bonds for themselves up to $30,000 a year. To arrive at this total—$10,000 each in electronic I bonds, plus $5,000 each in paper I bonds purchased with income tax returns—a couple must file separate tax returns. If they make a joint return, which is common, the maximum is $25,000. form When used to purchase paper bonds with a tax refund, a maximum savings bond purchase of $5,000 per return is set.

The couple can also buy more to give someone as a gift.

Another drawback: you have to hold a bond for 12 months. The government won’t use it any sooner. So be careful before you invest your entire emergency fund in I bonds, said Mr Mardock — you can’t cash them out for a year.

“The problem is that it’s not as liquid as a savings account,” said Mr. Tumin.

And keep in mind that if you cash out before holding a bond for five years, you’ll have to pay back the last three months of interest. Even so, given that bonds currently pay a higher rate than other savings options, you’ll likely stand out even if you pay the penalty, Mr. Tumin said.

Here are some questions and answers about Series I savings bonds:

Yes. The minimum purchase amount is $25 for electronic bonds and $50 for paper.

To purchase bonds (unless you are using tax refunds), Create a direct Treasury account and Connect to your bank account. You can buy digital bonds in any amount up to a penny as long as it’s over $25.

Paper bonds purchased at tax time have values ​​of $50, $100, $200, $500 and $1,000.

Savings bonds are not sold through brokers, which is one reason some people are unfamiliar with them. No commission.

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