Why Suze Orman Says This Asset Is the 'Greatest Gift You Can Give Right Now'
- I bonds are inflation-adjusted savings bonds that can be cashed out with no penalty in five years.
- You can gift digital I bonds in amounts from $25 up to $10,000.
- Your recipient will need a Treasury Direct account, so plan your gift-giving ahead of time to be sure it all goes smoothly.
Nothing screams holiday spirit like something from the U.S. Treasury.
With so many friends and family to consider at the holidays, it's tempting to take the easy way out with a generic gift -- does anyone really want that holiday-themed candle?! -- or, perhaps worse in a way, a gift card.
But there is a better thing you could get your loved ones this year, something that even Santa can get behind: I bonds. Yes, it's time to resurrect the beloved savings bond this holiday season.
Sure, I bonds aren't sexy like a tin of flavored popcorn or an apron that says, "Santa's Favorite Elf." But they will stand up to inflation and come out the other side stronger. Which is why Suze Orman says, "The greatest gift you could give right now is a Series I Bond."
Gift I bonds starting at $25
When you first look into I bonds, it can be a little daunting -- especially if you're looking at giving one as a gift. You see big numbers thrown around; the max I bonds purchase is for $10,000, and that's the number that gets talked about the most.
However, you don't need to empty your savings account to spread the I bond joy at the family holiday party. I bonds can be purchased (and gifted) in $25 increments. That's right, at $25 a pop, you can gift I bonds to everyone!
Alright, so there's a small catch here: Only digital I bonds can be purchased at the $25 level. Paper I bonds can only be purchased in five denominations: $50, $100, $200, $500, and $1,000. What's more, paper I bonds can only be purchased with your income tax refund, so the timing is poor for a holiday gift.
But don't despair. Although a digital I bond won't have the same impact under the tree, there are still ways to make the presentation festive.
Treasury Direct, the government site that sells I bonds, offers a variety of pre-designed gift certificate options that you can email or print, including many holiday-themed ones. (Keep in mind the certificate itself has no value, it's just for show.) Or, even better, put together a lovely little "certificate" yourself to wrap in overpriced paper your loved one will destroy in 0.2 seconds flat. (Don't forget to add glitter; it's the gift that keeps on giving all year long.)
How to gift I bonds
The main downside to gifting digital I bonds is that there won't really be much in the way of surprise. That's because both you and your gift recipient will need to set up a Treasury Direct account. And if you're gifting an I bond to someone under 18, the legal guardian needs to set up a linked account for the child.
(If you want to keep the element of surprise alive, you can always give your hand-designed I bond "certificate" for unwrapping, then handle the actual legwork after the fact.)
To gift a digital I bond, you'll need to know a few things about your recipient, including their name, Social Security number, and Treasury Direct account number. Then you hop into your own Treasury Direct account to purchase the bonds. Treasury Direct offers a handy step-by-step guide if you're unsure of how the process works.
Be sure you purchase the I bonds at least five days before you want the recipient to receive them. They need to sit your account for that long before you can deliver them. (This is to make sure the money for the bond has gone through all the various bank routes and gotten where it should be.)
If your gift recipient is unfamiliar with I bonds, it may be helpful to offer them a bit of advice on how they work when they unwrap your gift. At the very least, be sure they know the key points:
- I bonds can't be cashed out within the first year.
- If you cash out an I bond within the first five years, you lose the most recent three months of interest.
- I bonds have a lifetime of 30 years.
- The interest rate on an I bond changes every six months and is adjusted for inflation.
Sure, your niece or nephew may prefer the hottest new toy. But in five years when their bonds mature and that toy has long since been forgotten, they'll learn an important financial lesson -- and have a little cash with which to celebrate their newfound knowledge.
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