{"id":9760,"date":"2023-03-12T07:44:51","date_gmt":"2023-03-12T11:44:51","guid":{"rendered":"https:\/\/kerryhannon.com\/?p=9760"},"modified":"2023-03-12T07:44:51","modified_gmt":"2023-03-12T11:44:51","slug":"easy-way-to-invest-your-tax-refund-in-i-bonds","status":"publish","type":"post","link":"https:\/\/kerryhannon.com\/?p=9760","title":{"rendered":"Easy way to Invest your tax refund in I bonds"},"content":{"rendered":"
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
If you\u2019re expecting a tax refund this year, the big question you\u2019re probably pondering is what to do with it \u2014take a vacation, pay off some credit card bills, earmark it for some home repairs.<\/div>\n<\/div>\n
\n

Here\u2019s one idea to chew on \u2014 buy inflation-protected\u00a0Treasury I bonds<\/a>, one of the safest investments around. And the Internal Revenue Service makes it easy by giving you a form to file with your taxes.<\/p>\n

\n
\n
<\/a><\/div>\n<\/div>\n<\/div>\n

True, inflation has slowed, so interest rates on I bonds have dipped from the historically high annualized rate of 9.62% from last year. And they\u2019re not a place to set short-term savings \u2014 you must hold an I bond for at least a year and you forfeit a quarter’s worth of interest if you redeem before five years.<\/p>\n

Read on Yahoo Finance<\/a><\/p>\n

That said, I bonds are still no slouch. Bonds purchased before May earn an annualized yield of 6.89% for six months. That\u2019s still the fifth-highest rate since the bond\u2019s introduction in 1998, according to Treasury\u00a0data.<\/a><\/p>\n

\u201cI bonds offer an attractive way to put your tax refund to work earning interest rather than spending it, which is what a majority of people do with their refunds,\u201d Greg Bitz, a senior wealth advisor and certified financial planner at\u00a0WBH Advisory<\/a>\u00a0in Baltimore, MD, told Yahoo Finance.<\/p>\n

\u201cI like to think of it as a forced savings tool. There are some limitations as to the amount you can save through your tax refund, as well as holding requirements timing wise. In spite of these limitations this is a good way to lock in an above average return in what is considered a risk free investment.\u201d<\/p>\n

Nuts and bolts<\/strong><\/h2>\n

The I bond rate is made up of the fixed rate, which applies for the 30-year-life of the bond, and a semiannual inflation rate calculated from a formula based on the six-month change in the non-seasonally adjusted Consumer Price Index for all Urban Consumers (CPI-U) for all items.<\/p>\n

\u201cI bond purchases made before May of this year will include a 0.4% fixed rate component,\u201d Ken Tumin, a senior industry analyst at LendingTree and founder of\u00a0DepositAccounts.com<\/a>, told Yahoo Finance. \u201cThe fixed rate stays with the I bond for its life. That is added on to the inflation component which changes every six months. That fixed rate component now is the highest it has been since 2018 and 2019 when it reached 0.5%.\u201d<\/p>\n

\n