Are I Bonds a Good Investment in 2022?
In this post, we talked about how to buy I Bonds. Let’s take it a step back.
What are I Bonds?
I Bonds, also known as Series I Bonds, are a type of savings bond backed by the U.S. government. They offer a fixed rate of return that is decided twice a year, typically keeping pace with inflation.
Series I Bonds rose in popularity, especially in 2022, as their rate of return reached record levels. See chart below for the historical rate of return for the past 5 years.
Date of Issue
Rate of Return
November 2022 – April 2023
6.89%
May 2022 – October 2022
9.62%
November 2021 – April 2022
7.12%
May 2021 – October 2021
3.54%
November 2020 – April 2021
1.68%
May 2020 – October 2020
1.06%
This post is about are I Bonds a good investment in 2022.
5 Benefits to Investing in Series I Bonds:
1. Government backed.
Since bonds are basically investments with the government, it means they are government backed and are safe, especially relative to other investments.
2. Flexible investment amount.
The minimum investment amount for an electronic bond is $25, whereas a paper bond is $50.
3. Tax Deferred.
Similar to a 401(k), the interest earned is not subject to federal income tax until the bond is cashed in.
4. Flexible withdrawal.
I Bonds can be cashed in whenever; however, there could be penalties if withdrawn before 5 years. The penalty would include a three month interest. Depending on the rate of return, this could still be worthwhile.
5. Great returns.
As you saw in the chart above, the rate of returns have been phenomenal these past 1-2 years. Especially considering these bonds are backed by the government and, arguably, the least riskiest and safest investment you could ever make, it really could not get any better.
