Keeping an Eye on I-Bonds

By Chris Duderstadt

May 26, 2022

Keeping an Eye on I-Bonds

Key Points – Keeping an Eye on I-Bonds

  • I-Bonds Earn Interest and Are Shielded from Inflation 
  • The Interest Rate on I-Bonds Gets Recalculated Semiannually 
  • I-Bonds Grow in Value for Up to 30 Years 
  • You Can Currently Buy $10,000 Worth of I-Bonds a Year at 9.62%  
  • 2 Minutes to Read 

Inflation is an i-word that anyone and everyone is tired of hearing. Then, there’s interest rates that are rising that are also making people feel uncomfortable. But there is another i-word that Modern Wealth Management clients have been coming to us with questions about that we want to address. We’re talking about I-Bonds. 

What Are I-Bonds?

While I-Bonds aren’t a part of our portfolio management at Modern Wealth Management, we’re always willing to answer questions about them so clients and prospective clients can make educated decisions. Whether you’re one of the people asking questions or you’ve never heard of them, hopefully this quick review can help you or someone you know today. 

I-Bonds, also known as Series I savings bonds, are a low-risk savings option that grow in value for up to 30 years. When you own I-Bonds, they earn interest and are shielded from inflation. Simply put, their increases as interest rates increase.  

You are allowed to purchase $10,000 worth of I-Bonds a year, which can be purchased on You can also buy up to $5,000 worth I-Bonds in one calendar year via your tax refund. Just keep in mind that if you do purchase them with your tax refund, the amount needs to be divisible by $50. 

Earning Interest on I-Bonds

With inflation being so high, the interest rate of I-Bonds is 9.62%. That rate will be in effect through October. Once you’ve purchased an I-Bond, the rate will be applied for the next six months, as the interest gets recalculated semiannually. So, if you were to buy I-Bonds in May, you’d have a November recalculation to see what your next six months of interest is going to be. Interest would then be earned on the November principal. 

I-Bonds are a 30-year bond that can be cashed out after one year. However, if you cash out I-Bonds before five years, you will lose the last three months of interest. That’s an important penalty to be aware of. 

Understanding Their Appeal  

Given the interest that can be earned on I-Bonds, though, you can probably understand why we’ve fielded some questions about them.  Even if they come in at 0% six months from now (which wouldn’t be realistic), they would still receive 4.81% (half of 9.62%). 

However, aside from the people who have done their research and been asking us questions, the $10,000 limit probably has kept I-Bonds off a lot of people’s radar. Making 9.62% on $10,000 still won’t make a considerable difference for someone who has a $1 million portfolio. But nevertheless, I-Bonds are alternative bond option for people to consider, especially with how hard traditional bonds have been getting hit. 

Do You Have Questions?

Even if I-Bonds don’t seem like a lucrative option for you, they could make a difference for someone you know. If you have questions about them, you can schedule a 20-minute “ask anything” session or a complimentary consultation with one of our CERTIFIED FINANCIAL PLANNER™ professionals. You have the option of meeting with us in person, virtually, or by phone.  

Schedule Complimentary Consultation

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Investment advisory services offered through Modern Wealth Management, Inc., an SEC Registered Investment Adviser.

The views expressed represent the opinion of Modern Wealth Management an SEC Registered Investment Advisor. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Modern Wealth Management does not accept any liability for the use of the information discussed. Consult with a qualified financial, legal, or tax professional prior to taking any action.