Wednesday, November 3, 2021


Inflation protected savings bonds (I-bonds) have been one of my favorite zero friction savings vehicles since 2010. I've made monthly purchases since 2010 when inflation was thought to be vanquished for good. Now that it's back, at least temporarily, I-bonds are doing what they are supposed to do and preserving at least most of their purchasing power. I-bonds purchased between November 2021 and April 30, 2022 earn 7.21% interest. The rate is adjusted twice a year based on current inflation readings. Some of mine adjusted to 7.64% on November 1, and others will adjust higher than that at their mid-year mark. While I am happy to see the extra income, it's not really good news, since that interest will be taxed. Everyone except the federal government loses to inflation after taxes.

Still, it's better than high yield savings accounts that pay 0.4% and better than TIPS that have negative yields across the entire curve. Too bad you are limited in how much you invest in I-bonds in a year.