How to Buy Series i Savings Bonds

First off, many people don’t know what a Series I Savings Bond is. Well, it’s a U.S. Treasury Inflation-Indexed Security that you can purchase at most major banks. They are sold at face value and grow with inflation-protection earning for up to 30 years.
I Bonds are affordable. You can invest as little as $50 or as much as $30,000 per year and they are completely safe. They are backed by the full faith and credit of the United States Government. They also have tax advantages that many other investment don’t offer. You can defer Federal taxes on the interest earned for up to 30 years, and they are totally exempt from state and local income taxes. The best part about the I Bonds is, they will usually increase in value every month and interest earned is compounded semiannually. The longer you hold them, the more they earn. You must hold them for at least one year before you cash them in, so if you’re not a good saver, this may not be the investment for you.
Buying I Bonds goes a long way toward solving the biggest problem that all investor face: finding a way to save that guarantees that inflation won’t eat away the value of your savings. If inflation averages 2 1/2 percent, in just 10 years it will take $1.28 to equal today’s dollar. In other words, you’d have to earn 2 1/2 percent just to stay even. Because I Bonds pay a rate of return over and above changes in the Consumer Price Index for all Urban consumers (CPI-U), you’ll always be ahead of most savings programs. The money most people have in savings accounts at banks and other financial institutions is subjected to Federal and State taxes every year on the interest earned. With the I Bonds, your Federal tax on earning is deferred for up to 30 years and you never pay a dime of State or local income taxes.
The Treasury Department first started selling I Bonds in 1999 and that is when I bought my first $200 I Bond, and I’ve been buying one every month since that time. Those 1999 I Bonds are earning 5.76 % today, and some that I bought in 2000 are earning over 6%. The interest rate on I Bonds changes every six months, every May and November. The current 6 month interest rate is 3.74%, now remember, that’s for 6 months only, not a year. Do you have any idea what your financial institution is paying on your savings account? The last time I checked with my bank, it was paying less than 1% per year, unless I had a jumbo savings account of $10,000 or more, and then I would earn 3.50%, of course, that interest is subjected to State and Federal taxes. Most banks won’t tell you about the I Bond because it competes with their own savings programs that pay a lot less interest. Where else can you get a 3.74% six month interest rate on a $50 investment? You can also buy I Bonds on line from the Treasury Department’s website, and establish a Treasury Direct account. If you establish an account, you can have as little as $25 taken out of your bank account to buy I Bonds once a month. This is an excellent way to save for your kids college education, and if you do this, it may be tax free if they use the I Bond money for college expenses.
You can create your own self-directed tax-deferred annuity with I Bonds. If you start now, and buy one I Bond per month. You can do this for up to 30 years and when you retire start cashing one I Bond per month, the oldest first. That original I Bond would have doubled or tripled in value over the years giving you an income for as many years as you purchased I Bonds. If you only bought them for 20 years, it would give you an additional income for 20 years after you retire. You only pay Federal taxes at the end of the year on the interest earned when you cash them in, and no State or local income taxes. One of the best parts is, the Treasury Department doesn’t charge you any fees to buy or redeem your I Bonds.
This is the only savings that I current have, good old U.S Government I Bonds and it’s the best thing that I could do for me and my family because they are exempt from a probate, so I don’t need a Living Trust to pass on cash assets. The reason that I know so much about these I Bonds is, I used to work for the U.S. Department of the Treasury, and my job was to market government securities. The Treasury decided in 2003 that it didn’t need a marketing division for government securities so they closed down all the Treasury Marketing Offices throughout the United States and eliminated our jobs. My question to you is, “How many of you knew what an I Bond was and how it worked?” Nobody promotes these I Bonds any longer and Treasury contends that if the small saver wants information about I Bond, they can go to their website, which the average person doesn’t know exists. That website for your information is: When you get to this website click on the Individual/Personal column. All your questions about I Bonds will be answered because you now know where to go to get answers.