- I bonds are a good investment during periods when inflation rates are high.
- Buying I bonds isn't complicated, and you can get through the process fairly quickly.
- You'll need to set up a Treasury Direct account and link it to your bank account to transfer funds.
Purchasing I bonds is a snap.
These days, buying stocks in my brokerage account is really second nature to me. I simply sign on, choose the company I want to invest in along with the quantity of shares I'm looking to buy (or the amount of money I want to invest), and there you go -- I've acquired more stock.
Recently, I made the decision to invest in I bonds. If you're not familiar with them, they're government-backed securities whose interest rate is pegged to the rate of inflation.
Normally, when you buy bonds, you get a fixed interest rate on your money. The interest rate you get on your I bonds varies depending on inflation rates.
Now, the one drawback of buying I bonds is that you can't simply log into your brokerage account and purchase them. There's a bit more to the process. But thankfully, it's a simple one. Here's how to go about buying I bonds.
1. Decide how much you want to invest
The maximum amount of money you can put into I bonds each year is $10,000. But you can also invest as little as $25 in I bonds. Take a look at your finances and decide what dollar amount is right for you. Do keep in mind that you're required to hold I bonds for at least a year after purchasing them. So whatever money you put in won't be available to you for a minimum of 12 months.
2. Create a Treasury Direct account
Rather than use your brokerage account to buy I bonds, you'll purchase them directly from the U.S. Treasury Department. Simply create an account on treasurydirect.gov and follow the instructions.
3. Link your account to an existing bank account
To purchase I bonds, you'll need to link your Treasury Direct account to an existing checking or savings account. Make sure to carefully copy over your bank account number and routing number so the transaction can go through.
4. Transfer your funds over, and you're done
Once your accounts are linked, all you need to do is authorize the transfer of funds, and you're all set. You'll get a confirmation showing the amount of I bonds you've purchased. Hang onto that information so you know what you own, and also, so you can begin that 12-month countdown of having to hold onto your I bonds.
A hassle-free process
Investing in I bonds really isn't difficult at all, and at a time when inflation is soaring, it pays to use that to your advantage.
One thing to keep in mind is that I bonds aren't the only type of security you can purchase with your Treasury Direct account. There may be other government-backed securities you're interested in, so it could pay to do some reading and see which investment choices make sense for you.
Our best stock brokers
We pored over the data and user reviews to find the select rare picks that landed a spot on our list of the best stock brokers. Some of these best-in-class picks pack in valuable perks, including $0 stock and ETF commissions. Get started and review our best stock brokers.
Our Research Expert
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.
Copyright © 2018 - 2023 The Ascent. All rights reserved.