I-bonds are a worthwhile investment
Question: There was a time that Marketplace Money was very pro I-bonds. I haven't heard them mentioned in years. This year, when I submitted my tax return, I was given the option to purchase I-bonds with my refund. Thoughts? Rebekka, Los Angeles, CA
In Risk Less and Prosper: Your Guide to Safer Investing, authors Zvi Bodie and Rachelle Taqqu (finance professor at Boston University and financial consultant, respectively) give a strong endorsement to owning I-bonds, especially for small savers.
Here is their list of key features. I-bonds ...
- Provide security because they are U.S. Treasury securities backed by the full faith and credit of the U.S. government.
- Sell at face value, as a type of savings bond.
- Do not trade in the market.
- Offer liquidity and can be cashed in any time after 12 months.
- Can never have a redemption value less than the amount that you paid for them.
- Continue to earn inflation-indexed interest for up to 30 years.
- Allow investments as small as $25.
- Have a tax advantage.
I couldn't agree more. I-bonds are a good place to save. So, if it makes sense for you to save your refund, I would definitely consider putting the money in I-bonds.