How would you like to earn a 6.89% APR over the next six months by investing in something that’s essentially risk-free?
A few months back, I first introduced my fellow nurse practitioners to the world of I bonds. I bonds are a special type of U.S. savings bond where a portion of the interest rate adjusts with the cost of living. Hence, the “I” stands for inflation.
Ever since their inception, these bonds have gone virtually unnoticed in the investment world. But then in 2022, they quickly stole the spotlight, delivering 9.62% during the peak of the 2022 inflation hike. That’s absolutely amazing, considering that investors usually hope to make this kind of return from investing long-term in volatile markets like stocks. Earning this rate on a risk-free asset is an opportunity that doesn’t come along every day.
Though there is a buying cap of $10,000 per year on these bonds, and you have to forfeit 3 months’ worth of interest if you redeem the bond within 5 years of holding it, it’s still a chance worth taking. For the foreseeable future, inflation may take a while before it gets back down to the 2-3 percent range most of us are accustomed to. In the meantime, if there’s a chance that you could be earning almost 7 percent for leaving your cash idle, then why not?
Investors have until April to lock into this 6.89% APR. I-bonds readjust their interest rate every six months based on the latest inflation data. As the economy is concerned, I hope inflation goes down. But just in case they don’t, I’d be happy to wager my money on one of the safest assets in the world and earn a handsome interest rate until it does.