How to buy more than $10,000 worth of near-risk-free I-Bonds this year

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I-bonds have risen in popularity as riskier assets slide.

The bonds are backed by the federal government, the principal does not lose value, and the bonds earn monthly interest through two parts, a fixed and a floating rate. Currently, the variable component will pay a record annual rate of 9.62% through October, the US Treasury Department announced in May. This rate changes every six months.

“If you’re a person who wants the highest possible return now without risk, and you don’t need that money for at least a year, this is an investment that you should definitely put at the top of your list,” said Suze Orman, expert for personal finance.

Generally, the limit that a person can invest in I-Bonds through Treasury Direct is $10,000 per year. But for those who want to put up with more than that, there are a few strategies.

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“These have proven to be incredible investments through all of the downturns,” Orman said of the 2008 recession, the 2018 market downturn, and the pandemic recession.

Here’s what you should know:

tax returns

In addition to purchasing $10,000 worth of I-Bonds for themselves, individuals expecting a federal tax refund can purchase up to $5,000 in paper I-Bonds.

While obtaining a paper bond is a bit of a hassle, it is possible to switch to a digital version.

“Once you receive the paper I-Bond, you can actually convert your paper I-Bonds to electronic I-Bonds through Treasury Direct,” said Ken Tumin, founder and editor of

However, most prospects looking to buy I-Bonds this year will not be able to take advantage of that option. To receive a refund in Paper I Bonds, you were required to file an IRS Form 8888 with your tax return.

married couples and children

The limit for purchasing I-Bonds is per person, so a couple can invest up to $10,000 annually in the investment, or up to $15,000 each if they both also choose to purchase tax refunds in Paper I-Bonds .

Families with children can also invest up to the annual limit for each child. To do this, the parent must open a Treasury Direct account for the child and then make the purchase.

Of course, that money counts as a gift and must be used for the good of the child, said Christopher Flis, certified financial planner and founder of Resilient Asset Management in Memphis, Tennessee.

A business or trust

Individuals who run companies or have a living trust can also extend the I-Bond purchase limit by purchasing the assets on behalf of the company.

“There are several companies that are allowed to buy I-Bonds,” said John Scherer, a CFP and founder of Trinity Financial Planning in Madison, Wisconsin, including LLCs, corporations and sole proprietorships.

That means that even if you’re self-employed and filing taxes with an IRS Schedule C as a small business, you can buy up to $10,000 of I-Bonds annually for that business. This purchasing power also applies to Living Trusts, which allow people to purchase an additional $10,000 in I-Bonds per year.

For example, a couple, each owning a business and having a living trust, could buy up to $60,000 in I-Bonds annually and $5,000 per person in paper bonds, bringing their annual total to $70,000 . If this couple had two children, they could purchase an additional $20,000 in IBonds on her behalf.

The administrative page

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Of course, buying I-Bonds can get complicated for so many different people and organizations. Each person or organization you buy IBonds for must have a Treasury Direct account – they cannot be combined – so you need to make sure all logins and passwords are secure.

Depending on when you buy I-Bonds, you also need to keep track of when you can access the money. You can’t take money out of I-Bonds for a year, and if you touch the money five years ago, you’ll miss out on the last three months’ worth of interest accumulated on your principal just before you sold it.

Additionally, many people may not want or be able to invest tens of thousands of dollars in I-Bonds that they won’t be able to touch for a year. In general, I-Bonds make sense as part of the emergency fund, according to Flis.

He thinks about it this way: A portion of your emergency fund should be fully liquid, in cash, and ready to go. But if you have extra funds beyond what you need in cash, it makes sense to invest some of that money in I-Bonds to weather inflation with little risk.

“It’s for the next tier of your emergency fund,” Flis said.

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Disclosure: NBCUniversal and Comcast Ventures are investors acorns. How to buy more than $10,000 worth of near-risk-free I-Bonds this year

Gary B. Graves

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