Series I Savings Bonds

Now is the time more than ever to get out of debt save money. The economy has created a volatile environment that consists of few jobs, inflation and rising cost of living. In order to ride out an economic storm, economists say saving money and getting out of debt is the perfect solution. There are many different ways to save money, which all provide different advantages and disadvantages. Savings accounts and money market accounts are popular forms of saving accounts. However, government bonds can also be used to save money as well. Series I savings bonds are a type of bond investment that have a low risk.

Since the economy is experience inflation, investors will look for ways to avoid inflation impacting their general assets. In fact, the announcement of QE3 can be quite unsettling for those who are not prepared. When the government prints out stimulus money, be ready for inflation. Many economists state that we are headed into a hyper inflationary depression. The good news is there are plenty of investment strategies that are designed for this exact type of problem. Series I savings bonds pay the investor interesting, but the icing on the cake is involved with avoiding inflation.

These types of bonds have an annual interest rate that is paid to the investor, but it is impacted by inflation rates as well. In fact, the interest rate that a Series I savings bond will pay the investor will heavily rely on the inflation rate. Interest is added to the bond on a monthly basis, and when the bond reaches maturity, the account holder will receive their investment back plus the interest earned. I bonds are extremely simple when it comes to purchasing them. For example, I bonds are basically sold at the value in which the bond is assessed.

On top of that, I bonds can be easily purchased online. The interesting fact about purchasing Series I savings bonds is the amount in which they are sold. I bonds have incremental amounts that they are sold at $50, $75, $100, $200, and so forth. The face value of the bond is what the investor is expected to pay when purchasing a Series I savings bond. Most financial organizations that sell Series I savings bonds have a minimum and a maximum amount in which the investor can purchase. Typical minimum amounts are $50 I bonds, while the maximum amount is $5,000.

The restriction on the amount of I bonds that can be purchased are regulated on a yearly basis. In other words, if an investor purchases $5,000 in Series I bonds, they won’t be able to purchase more until the next calendar year. These types of bonds also have restrictions when it comes to maturity dates and interest paying time frames. Some are associated with having penalty fees when redeeming a Series I bond before a certain amount of time has passed. If a bond is redeemed before 5 years there will be a penalty fee in most cases.

There are plenty of advantages for short and long term investment goals that Series I bonds provide the investor. However, there are also disadvantages like tax regulations. I bonds are subject to taxes since 1986. The IRS imposes tax regulations, but Series I bonds are not subject to state taxes. Regardless, this type of bond provides a safe haven for investors who need to avoid inflation and other risky market situations. Many investors are dumping their assets out of cash because of the fear of inflation going to extreme new heights. Now is the time to look for alternative ways to save cash.

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