The safety of I Bonds

Investors who are looking for a low-risk and high-yield place to store their wealth may be interested in exploring opportunities offered by inflation-linked savings bonds (I Bonds).

An article in the Wall Street Journal describes how yields for these bonds are expected to increase from 4.84 percent to 4.92 percent beginning in November, due to the increase in inflation seen over the past six months.

I Bond yields are based on both a fixed rate – currently set at 0 percent by the Treasury – and an adjustment based on inflation.

The fixed rate is maintained over the life of the bond, which is 30 years. Meanwhile, the inflation adjustment is adjusted every six months.

According to the Wall Street Journal, investors who buy I Bonds before November 1st will be able to guarantee the 4.84 percent rate for the October-March period, followed by a 4.92 percent rate for the following six months.

Although savers will be penalized if they cash in their bonds before the first five-year period is up, investors who maintain their money for one year could still enjoy a yield of 3.86 percent once the penalty has been taken into account, the publication explains.

Each individual may purchase up to $5,000 in I Bonds.