With rising inflation and market volatility people are looking for a place to put their money that will protect it and help it grow.
Right now, a lot of headlines are proclaiming the remarkable opportunities in I-Bonds. Some are saying they could yield close to 10% growth over the next six month.
This is eye-catching because it appears to offer the holy grail – a low-risk, high-return, tax-advantaged investment!
This may not be the case, however, for two primary reasons:
- Individuals are limited to purchasing a maximum of only $10,000 worth of I-Bonds per year.
- There are two components to return: a fixed rate (for the life of the bond), and a variable inflation component. It is this variable component that is making return so attractive. That could still change, of course.
So for $20,000, this could indeed be a good investment! The small tranche size probably would not make a meaningful difference to your plan overall.
For investors concerned about inflation, this maybe a better long-term strategy.
- Have an appropriate investment time-horizon
- Make a purposeful allocation to stocks
- Make a purposeful allocation to bonds
- The potential introduction of inflation-hedged fixed income
Before you fall for headlines contact a financial advisor to help you read through the hype and make a purposeful decision based on your future and your plans.