I-bonds are the only investment everyone should have right now

If there’s one investment everyone should have right now, it’s a Series I bond, according to personal finance expert Suze Orman.

The bond’s floating rate is inflation-based, meaning the asset currently has a high yield. The consumer price index rose 8.6% in May, the highest rate since 1981. The annualized yield on the I-bond is a record 9.62% through October 2022.

“This is a fantastic investment,” said Orman, who began investing in I-bonds in 2001.

Backed by the US government, the bond does not lose value. The variable interest rate is set each year in May and November. It also has a flat rate currently at 0%.

More from Invest in You:
Suze Orman’s Warning to Stop During the Great Resignation
These Strategies Can Help You Pay Off Credit Card Debt When Interest Rates Rise
Here’s what experts want you to know before you start investing:

You can only buy them directly from the US Treasury Department website at TreasuryDirect.gov. Available amounts start at $25 and you can invest as much as $10,000 each year, although there are some exceptions, such as the ability to get up to $5,000 paper I-bonds as part of your federal tax refund.

If you want to buy paper bonds instead of electronic ones, you can buy between $50 and $1,000 annually.

You can’t cash the bond for a year, and if you cash one within five years, you’ll lose the previous three months in interest.

While it’s best to hold onto the bond for five years or more, if you don’t think you can do that, don’t let it stop you from buying, said Orman, host of the Women and Money podcast.

A good inflation-era bet, if you can afford it

Images of people | Getty Images

“Given that inflation is likely to stay there for a while, even with a three-month interest penalty in years two through five… it’s still worth it, believe it or not,” Orman said.

In addition to smart investments, also think about your current financial situation and whether or not you can continue to provide for your expenses, says Orman.

“People really need to look at — what do they want to do versus what do they need to do? What do they want to buy versus what do they need to buy?” said Orman.

“Now if you’re scrambling where every penny goes out, comes in, you’re in a situation where you have to cut corners.”

SIGN UP: Money 101 is an 8-week learning course to financial freedom, delivered weekly to your inbox. For the Spanish version Dinero 101, click here.

CHECKING OUT: Meet a 34-year-old who has sold over 11,000 items on Etsy and is making nearly $3,500/month in passive income with Acorns+CNBC

Disclosure: NBCUniversal and Comcast Ventures are investors in acorns

Leave a Comment