4 simple steps to buy I bonds

Image source: Getty Images

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.

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.

The best credit cards from Ascent

We’ve looked at the most popular offers to land on the curated picks that deserve a place in your portfolio. These best-in-class choices offer rich perks, such as big sign-up bonuses, long 0% APR introductory offers, and robust rewards. Get started today with the best credit cards from The Ascent.

We are firm believers in the Golden Rule, which is why editorial opinions are our own and have not been previously reviewed, approved or endorsed by the advertisers included. The Ascent does not cover all offers on the market. The editorial content of The Ascent is separate from the editorial content of The Motley Fool and is created by a different team of analysts. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Comments are closed.