When it comes to saving money that you don't need for at least one year there is a terrific high-rate, low-risk savings option available to the typical household: U.S. I-Bonds.
To be sure, the correct response to the promised combination of high-rate and low-risk is usually to run — fast. Not in this case.
For one thing, the current rate on I-Bonds is a steep 7.12%. For another, I-Bonds are creditworthy since they're obligations of the U.S. Treasury. Finally, I-Bonds hedge against inflation measured by the Consumer Price Index (CPI).
Your savings in I-Bonds will maintain its purchasing power over time. Everyone these days is getting a lesson in the value of inflation-protected investment.
I've written about I-Bonds recently. I'm revisiting the topic for two reasons.
First, to remind readers that if you get a refund on your taxes, you have the option to buy up to $5,000 worth of paper I-Bonds with the refund.
The other factor is that the rate on I-Bonds will adjust in May. The CPI for March will be released on April 12, and that is the only data left to determine the inflation adjustment for the next six-month cycle.
Even if the March CPI comes in flat from February — highly unlikely — the next adjustment will be 6.86% already, notes Harry Sit of the Finance Buff blog.
