Investing / Bonds

Inflation Relief: Act Quickly and Still Earn Nearly 10% Return on This Investment

U.S. Government Series I Bonds stock photo

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These aren’t the easiest of times to get a decent return on your investments considering stock markets fluctuations and savings account rates continuing to lag well behind inflation. But there is one way to get a good return and beat inflation — buy a Series I savings bond from Treasury Direct that currently pays 9.62% for six months on up to $10,000 in savings.

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Just make sure to act quickly. According to the Treasury Direct website, you must complete the purchase of this bond by Oct. 28, 2022 to ensure issuance by Oct. 31, 2022.

Series I savings bonds are designed to protect you from inflation because you earn both a fixed rate of interest and a rate that changes with inflation. Interest on the bond is paid monthly and compounded semiannually, meaning that every six months Treasury Direct applies the bond’s interest rate to a new principal value. The new principal is the sum of the prior principal and the interest earned in the previous six months.

You can buy electronic I bonds via your TreasuryDirect account or paper I bonds with your IRS tax refund. Electronic I bonds are paid automatically when they mature. With paper I bonds, you need to submit the bond to cash it. You can buy up to $10,000 in electronic I bonds and up to $5,000 in paper I bonds.

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As CNN reported, the 9.62% rate you get with a Series I savings bond is much better than you’ll see on bank savings accounts. Even high-yield savings accounts are unlikely to pay much more than 3%, and you might not get even 1% at most big banks.

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There is a catch with I bonds, however: You have to hold them for five years to get the full amount of interest — although, you can hold them as long as 30 years if you want. You can cash a Series I bond at any time after the first year, but you’ll sacrifice three months of interest if you do so before the fifth year.

“It is essentially an illiquid investment for the first 12 months,” certified financial planner Doug Flynn of Flynn Zito Capital Management told CNN.

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About the Author

Vance Cariaga is a London-based writer, editor and journalist who previously held staff positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal and Business North Carolina magazine. He holds a B.A. in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting earned awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A native of North Carolina who also writes fiction, Vance’s short story, “Saint Christopher,” placed second in the 2019 Writer’s Digest Short Short Story Competition. Two of his short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. His debut novel, Voodoo Hideaway, was published in 2021 by Atmosphere Press.

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