Series I Bonds: Are They Right For You?

Series I bonds offer a low-risk, interest-earning addition to your portfolio. As part of a well-diversified portfolio strategy, now may be a good time to put some additional cash into I bonds and take advantage of an attractive interest rate.

What is a Series I bond?

A Series I bond is issued by the US Treasury. The bond accrues interest monthly until it reaches 30 years or you cash it, whichever comes first.

An I bond has two interest rates – the fixed rate and the inflation rate. These two rates combine to determine a bond owner’s actual rate of return, called the composite rate. A new rate will be set every six months based on the fixed rate and on inflation.

The US Treasury limits the composite rate to no less than 0%, meaning the rate of return on I bonds will never be negative.

What’s the benefit?

The composite rate on Series I bonds is currently 9.62% (annualized). Though the interest rate is variable and will change over time, purchasing I bonds now guarantees that you will earn this interest rate until October 2022 when the new rate is set for the next 6 months.

Are there risks?

An I bond is considered an extremely low risk investment. However, the ultimate rate of return is variable and not guaranteed beyond the current 6-month rate. The current interest rate is high because inflation is higher than usual – if Federal Reserve policy reduces inflation the inflation rate for I bonds will also decrease.

Note that an I bond cannot be redeemed for at least one year after purchase, and any redemption between years 1 and 3 does not receive the interest from the three months prior to redemption.

How do I buy a Series I bond?

Visit to purchase electronic I bonds. An I bond must be purchased directly by the investor; it is not something your advisor can add to your portfolio for you. Series I bonds purchased electronically come in any amount to the penny for $25 or more. Paper I bonds can be purchased using your federal income tax refund. The amount of a bond purchased is limited to $10,000 per person per year.

Are I bonds right for me?

Determining what investments are the best fit for you depends on several factors: your age, the timeline for when you need to withdraw from investments, your comfort with risk, and your overall financial health. If you have some cash that is not part of your basic emergency fund and you do not need it in the next 1-3 years, I bonds may be a good choice. However, as with all investing decisions, we recommend consulting with your financial advisor to determine if I bonds are the best fit for your unique situation.

Kirsten C. Cadden, CFP®

Associate Advisor, Warren Street Wealth Advisors

Investment Advisor Representative, Warren Street Wealth Advisors, LLC., a Registered Investment Advisor

The information presented here represents opinions and is not meant as personal or actionable advice to any individual, corporation, or other entity. Any investments discussed carry unique risks and should be carefully considered and reviewed by you and your financial professional. Nothing in this document is a solicitation to buy or sell any securities, or an attempt to furnish personal investment advice. Warren Street Wealth Advisors may own securities referenced in this document. Due to the static nature of content, securities held may change over time and current trades may be contrary to outdated publications. Form ADV available upon request 714-876-6200.