Suze Orman Says 'Don't Be Stupid' -- Make This Investment

It's advice worth following today.

It's hardly news that inflation has been rampant since the start of the year (and even before). In June, the Consumer Price Index, which measures fluctuations in the cost of consumer goods, rose 9.1% on an annual basis, which is pretty extraordinary, and not in a good way.

Because living costs have soared so much, consumers are increasingly being forced to make difficult choices. Some are moving to smaller homes or cutting back on expenses. Others are racking up credit card debt just to stay afloat.

But while rampant inflation isn't a good thing from a buying perspective, it offers investors a solid opportunity to make money. And there's one investment financial expert Suze Orman thinks it would be downright stupid (her words) to pass up right now.

A good place to put your money

On a recent podcast, Orman reiterated something she's been saying for weeks -- that now's a good time to invest in I bonds. I bonds are government-backed securities whose interest rates are tied to the rate of inflation.

During periods of low inflation, I bonds may not be the best investment, simply because they won't pay so generously. But right now, with inflation soaring, I bonds are a solid bet due to their higher interest rate. And that's why Orman insists that anyone who doesn't put money into them is being foolish.

How to buy I bonds

You can't purchase I bonds in your regular brokerage account. Instead, you can purchase them directly from the U.S. Treasury.

Now, you can only purchase up to $10,000 in I bonds per year. That's a per-person limit, though, not a household limit. So if you're married, you and your spouse can each put $10,000 into I bonds for a total of $20,000.

Are there drawbacks to purchasing I bonds?

I bonds must be held for at least a year before cashing them out. As such, they're a terrible place to stash your emergency savings. What’s more, if you cash out your I bonds before holding them for five years, you'll be penalized to the tune of a few months of interest.

It's also important to consider that while I bonds may be a great investment now -- one Orman insists you should jump on -- that could change if the rate of inflation comes down (which is something we should hope for). Many people are used to buying bonds with a fixed interest rate, but that's not how I bonds work. The amount of interest they pay you correlates to inflation, so the interest you collect this year could be different than the interest you collect three years down the line.

But right now, Orman says that I bonds are a no-brainer -- especially at a time when stocks are volatile. So if you don't own I bonds, it pays to consider investing in them. You can buy I bonds in increments as small as $25, too, so having limited funds doesn't have to take this investment opportunity off the table.