How to earn 5.62% with an I-bond

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By gururaul
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earn 5.62% with an I-bond

Don't risk any more money with risky investments. Look to the U.S. government for a safe haven with high returns.

Difficulty: Moderate

Instructions

Step 1

Earning a 5.62% return on your money is as simple as visiting your local bank branch or visiting www.treasurydirect.gov. Local banks can issue paper bonds. The treasury direct issues online bonds. I myself fancy paper bonds.
Step 2

Inflation bonds, otherwise known as I-bonds are flying under the economic radar these days. An I bond is a government backed bond so you can never lose your investment. It also currently pays a fixed rate of 0.70% which stays with the bond for the entire 30 year period. The inflation rate currently being paid is 4.92%. Add these two numbers up and you get a 5.62% return.
Step 3

The fixed rate remains in effect until April 30 so hurry to your bank before then. The fixed rate is repriced every May 1 and November 1. The previous six-month rate was a whopping 0%.
Step 4

The inflation rate remains in effect until April 30th as well. The rate will either go up or down depending on inflation.
Step 5

Please remember you cannot sell the bond within the first twelve months. You must also hold onto the bond for five years to avoid a 3 month interest penalty.
Step 6

Finally, I bonds are subject to Federal income tax. They are exempt from both state and local income tax.