I-bonds

I-bonds

Treasury savings bonds with a 30-year maturity indexed to account for inflation.

Inflation-Linked Savings Bond

In the United States, a savings bond with an inflation-indexed interest rate. This bond pays a fixed coupon plus an amount adjusted every six months according to the Consumer Price Index. These bonds are sold at face value and pay par upon maturity, which is 30 years after purchase. Series I bonds not held for at least five years are subject to a redemption penalty. Federal taxes on interest are deferred until redemption or maturity. Savings bonds are non-transferrable and must either be held or redeemed.

Series I Savings Bond

In the United States, a savings bond with either a fixed interest rate or an inflation-indexed interest rate. The inflation-indexed version pays a fixed amount plus an amount adjusted every six months according to the Consumer Price Index. For both types of Series I bonds, the interest rate is announced twice annually. These bonds are sold at face value and pay par upon maturity, which is 30 years after purchase. Series I bonds not held for at least five years are subject to a redemption penalty. Federal taxes on interest are deferred until redemption or maturity. Savings bonds are non-transferable and must either be held or redeemed.
References in periodicals archive ?
The I-bonds are similar in several respects to their older EE savings bond cousins.
In addition to the inflation protection, I-bonds differ in another important respect from EE bonds.
If inflation kicks in, though, I-bonds begin to look more attractive, indicates the Institute of Certified Financial Planners, Denver, Colo.
The US government began offering TIPS in 1997 and I-Bonds the following year.
TIPS are adjusted to CPI fluctuations monthly, whereas I-bonds are tweaked twice a year in May and November.
Also called inflation-adjusted savings bonds, I-bonds are a very safe investment because market volatility doesn't affect your principal or earned interest.
I-bonds have another benefit: The interest they earn becomes tax-free if they are redeemed to pay for qualified higher education expenses, such as tuition and fees at colleges and vocational schools.
An individual can only purchase $30,000 worth of I-bonds a year.
I-Bonds deliver a guaranteed rate of interest above the inflation rate and the interest they earn is compounded semiannually.
Tax savings: I-Bonds are exempt from state and local taxes, and if the bond is redeemed to pay for college tuition and fees, investors may exclude all or part of the income when calculating their taxed, says Kenneth Johnson, vice president and portfolio manager at Loomis Sayles & Co.
Johnson says I-Bonds should be used to maintain a well-diversified portfolio, which can minimize overall investment risk.
Francis explains that I-Bonds, which were introduced in 1998, are available in denominations ranging from $50 to $10,000.