Right now, I Bonds are paying 3.54% and are expected to go up to around 7% in the next six months. [May 2022 update: The rate is now 9.62%.] Is your online bank or CD paying that well? It is probably well past time to have a look at buying some I Bonds with rates like this.

I Bonds are government bonds that always keep up with inflation. They are such a good deal that the Government limits how much you can buy each year. It also doesn’t allow institutions to buy and sell them; they are only offered to individuals. They are only available to purchase through TreasuryDirect.gov. That’s why they aren’t marketed very well. When Fidelity and Vanguard can’t sell them, they don’t advertise them.

I Bonds have to be held for a minimum of one year. They must be held for a minimum of five years to get rid of a cash-out penalty of three month’s interest. They can be held up to 30 years. If you have some cash or investments that could tide you over in an emergency, these would be a great place to park your emergency fund cash, especially because they keep up with inflation.

$10,000 per Social Security number can be purchased each year. An extra $5,000 worth of I Bonds can be purchased with a Federal tax refund. The rates are so good right now that many people are over paying their taxes so as to get $5,000 more in I Bonds for next year.

I set up an account for my myself, my wife, and each of my kids at TreasuryDirect.gov. It’s a painful government website, but once the account is open, it’s easy to buy bonds from your linked checking account. Harry Sit has a great tutorial if you need help setting up your account.

After a few years, you could have a good portion of your bond allocation in I Bonds if you wished. You could have an inflation adjusted emergency fund set up. You could save for that future car or wedding purchase. Keep saving in a taxable account, but give I Bonds a look, if you haven’t already.