'America's Best-Kept Investing Secret' Is a Savings Bond From Uncle Sam
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Series I savings bonds, aka I bonds, are having a bit of a moment. Long championed by financial wonks as one of the best ways to hedge against inflation, I bonds are finally getting mainstream attention, thanks to interest rates that now far outpace similar safe investments.
The reason these government savings bonds offer such good protection against inflation is by design: the I stands for inflation. As prices for consumers go up, so do I bond interest rates. And as of this week, I bonds are paying out the second highest rate in their history: a tremendous 7.12%. That’s nearly 12 times the rate you could earn from the country’s best savings accounts at the moment.
The current interest rate applies to bonds issued between November 2021 and April 2022. On May 1, 2022, the U.S. Treasury will recalculate a new inflation rate, based on the latest Consumer Price Index.
Zvi Bodie is a long-time proponent of I bonds. Bodie is an economist and author of several investing and finance books. He refers to I bonds as “America’s best-kept investing secret,” due to their relative obscurity.
“The best way to think about [I bonds],” Bodie says, is as “an inflation-protected savings account backed by the full faith and credit of the U.S. government.”
According to Bodie, no investment is safer than I bonds, and they should be utilized by “every person with a Social Security number.”
