Last year we saw the frenzy of the 9% I Bond sweep across the country, and while the rate was attractive, as with any investment buyers need to beware. In 2022 both stock and bond markets were down double digits while I Bonds were providing a decent return, one of the best performing asset classes short of the energy sector.
While this all seemed great at the time, the allure did have some drawbacks. The first being the liquidity and expected time horizon and the second is the relatively small amount that can be invested in an I Bond. Often, the average investor doesn’t realize that you can only invest $10,000 per person or $15,000 if you use a tax refund to acquire the I Bond. The last drawback, and perhaps the most important, is that the rates reset every six months.
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