4 simple steps to buy I bonds
These days, buying stocks in my brokerage account really is second nature to me. I simply sign up, choose the company I want to invest in and the amount of shares I’m looking to buy (or the amount of money I want to invest), and voilà, I’ve acquired more shares .
Recently, I made the decision to invest in I bonds. If you are not familiar with them, these are government guaranteed securities whose interest rate is indexed to the rate of inflation.
Normally, when you buy bonds, you get a fixed rate of interest on your money. The interest rate you get on your I bonds varies with inflation rates.
In the meantime, right now, inflation is skyrocketing. And that makes I bonds a good bet. In fact, many financial experts are urging people to buy I bonds since they are currently paying so generously.
Now, the only downside to buying I Bonds is that you can’t just log into your brokerage account and buy them. There’s a bit more to the process. But luckily, it’s simple. Here’s how to buy I bonds.
1. Decide how much you want to invest
The maximum amount of money you can invest in I Bonds each year is $10,000. But you can also invest as little as $25 in I bonds. Review your finances and decide what dollar amount is right for you. Keep in mind that you must hold I bonds for at least one year after purchasing them. So whatever money you invest, you won’t be able to for at least 12 months.
2. Create a direct cash account
Rather than using your brokerage account to buy I Bonds, you’ll buy them directly from the US Treasury Department. Simply create an account at treasurydirect.gov and follow the instructions.
3. Link your account to an existing bank account
To purchase I Bonds, you will need to link your Treasury Direct account to a check or savings account. Be sure to carefully copy your bank account number and routing number so that the transaction can be completed.
4. Transfer your funds and you’re done
Once your accounts are linked, all you have to do is authorize the transfer of funds, and you’re done. You will receive a confirmation indicating the amount of I Bonds you have purchased. Hang on to this information to know what you own, and also, to be able to start that 12 month countdown where you will have to keep your I links.
A hassle-free process
Investing in I bonds really isn’t difficult at all, and in a time of skyrocketing inflation, it pays to use this to your advantage.
One thing to keep in mind is that I Bonds aren’t the only type of security you can buy with your Treasury Direct account. There may be other government-backed securities that interest you, so it might be worth doing some reading and seeing which investment choices are right for you.
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