Podcast Show Notes – The Architecture of Wealth
Name of podcast: The Architecture of Wealth
Episode title: I-Bonds! Once Boring. Now Sexy. With a 6-Month Annualized Rate of 9.6%, Many Are Taking a New Look at the US Savings Bond.
I-Bonds. Used to be boring. Now, not so much. As inflation has risen, so has their return. They are not for everyone and be aware of liquidity issues and penalties, but they could be a great inflation hedge for many.
For information about Sona Wealth Advisors: www.SonaWealthAdvisors.com
Guaranteed by the US Government, I-Bonds – aka Inflation Bonds – are like a savings bond. Issued with a fixed rate of return, which is 0% at the moment, I-Bonds also feature an inflation component. Consult with your financial professional. I-Bonds are not right for everyone.
Undersold because there is no commission, I-Bonds are sold directly by the US Government. Resetting every six months, the inflation component of I-Bonds delivers a pretty good return for those investing for inflation. Previously, we recommended I-Bonds for emergency fund buckets despite liquidity issues. Now, we may never get a better rate than this. One year of 8% inflation on average is unlikely moving forward.
The maximum amount on I-Bonds is $10,000 per year, per social security number. Technically, the maximum is $15,000 when a person invests $5,000 of their Federal tax refund into paper bonds.
The tax can be deferred up to 30 years when a person’s tax burden can be lower. The interest can qualify for Federal tax-free for qualified education expenses. People can also gift bonds to someone else to the maximum gift limit. The more frequently interest is compounded, the larger the return, making the semi-annual interest on I-Bonds good. I-bonds are low risk with some nuance to them, and they can help investors compensate for inflation.
2:25 Definition of I-Bonds
3:04 Explanation of why undersold
3:19 Inflation component discussion
4:16 Emergency fund bucket component
5:25 Inflation-friendly aspects
6:10 Maximum amounts & deferred tax
7:10 Interest tax-free for qualified education expenses & gift bonds
7:45 Interest compounding
8:39 New rate: 9.6% starting May 1st
8:51 Positives and negatives
Chanhassen, MN 55317
The Architecture of Wealth Podcast is for educational purposes only. Investment Advisory Services are offered through Sona Financial LLC (DBA Sona Wealth and Sona Wealth Management), a registered investment adviser authorized to do business in states where registered or otherwise exempt from registration. Nothing discussed during this show/episode should be viewed as investment advice. If you have questions pertaining to your specific situation, please consult your own financial professional.