The investment everyone’s talking about – I-Bonds – probably aren’t worth the hassle, but you can decide for yourself.
THE UPSIDE
A 9.62% guaranteed interest rate (currently)
That’s the extent of the upside, which is a pretty great upside. A Federally backed guaranteed 9.62% ROI is unheard of.
The 9.62% is locked in for any purchases made before October 31st (it resets every 6 months).
THE DOWNSIDE
You can only buy $10,000 per person.
That means you’ll earn $962 in interest. That’s great on a relative basis, but not so hot on an absolute basis.
(You CAN purchase more if you’re married and have kids. More on that below.)
You can only purchase them through TreasuryDirect.gov
Your guy/gal can’t buy them for you (including Financial Zen). You have to buy them directly through the government website – www.treasurydirect.com
I went through the process and it took me about 30 minutes.
IN CONCLUSION
It boils down to what your time is worth. If your 10X hourly rate is less than $2,000 (meaning your current rate is $200/hr), then it’s a good deal for you.
If 30 minutes of your time is worth more than $1,000, then it’s not worth your time.
(That said, for our Financial Zen Members, we might use a Monthly meeting for this.)
THE LOOPHOLE
You actually CAN buy more than $10,000.
If you’re married, your spouse can buy $10,000 too.
You can also buy an extra $5,000 with your tax refund.
And finally, you can ALSO buy $10,000 per kid. HOWEVER, that money would be held in a custodial account and would technically be your kids’ money.
A FINAL WORD OF CAUTION
Do NOT use these for your emergency fund! The most important part of your emergency is liquidity – meaning you can get it at a moment’s notice.
I-Bonds are not liquid in that sense. These would only be appropriate for your long-term bucket.
Like most things, I-Bonds are only good nor bad in respect to your particular situation. Talk to your guy/gal for help figuring out if they’re good or bad for you.
