Defeat Inflation With These Record-Breaking Interest-Rate Bond

On May 2, the U.S. Department of the Treasury announced that all I bonds issued through October 2022 would carry a record-breaking variable interest rate of 9.62 percent.

According to a report from the New York Times, this new rate for I bonds – federal savings bonds indexed to inflation – is the highest since their inception in 1998.

I bond rates are set via a fixed-rate (currently zero) and a variable rate (that can change twice a year and is based on the Consumer Price Index), combined into a composite rate.

The current U.S. annual inflation rating stands at 8.5%, according to a March 2022 report by the U.S. Department of Labor.

A Measure of Protection Against Inflation

As a result, prices everywhere are trending upwards, and there has been news that everything from the supply chain to the tourism industry will be affected in the coming months.

The good news is that the interest rate of these I bonds provides solace by helping to shield you from the negative financial effects of the current economy.

Compared to interest rates of C.D.s offered by traditional U.S. banks maxing out at less than a tenth of a percent, now is the best time to invest in these bonds – and experts agree.

The worst-case scenario with holding these bonds is that you get your initial investment back when you cash out: according to the Department of the Treasury, this scenario happens when the composite rate of the I bond reaches zero.

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