Search:

Would you like to contribute to this site? Bonds Menu Submit an Article Submit a Tip Place your Ad Add URL Bonds Questions? Contact Us  About Bonds   Bond Types   Investing In Bonds   High Yield Bond   Investment Bonds   Bond Investing Tools   401K Bonds   Municipal Bonds   State Municipal Bonds   Muni Bonds   Treasury Bonds   Government Bonds   US Treasury Bond   Premium Bonds   Corporate Bonds   Savings Bonds   US Savings Bonds   Savings Bonds Rates   Savings Bond Services   Series Savings Bonds   Series EE Bonds   I Bonds   Interest On Bonds   Bond Calculator   Bond Services   Buy Bonds   Trade Bonds   Redeeming Bonds   High Yield Savings   HYIP   High Yield Investing   About Investing   Stock Market   Stock Prices and Quotes   Company Stocks and Bonds   Stocks Advice   Stock Services   Tax Bonds   Bail Bonds   Bail Bonds Agency   Investing Help

Return To Bonds Article Archive   I Bonds: Treasuries with an Inflationary Kicker By Glenn Dahlke There must be a touch of inflation in the air, since a few clients have been calling with questions regarding I Bonds. With the low inflationary environment of late, there hasnt been a lot of press concerning I Bonds. But since we dont know what evil lurks around the economic corner, it may be time to review what these I Bonds are all about. Think of I Bonds as Series EE bonds on steroids. Like Series EE bonds, they are issued by the U.S. Treasury and can be purchased at your local bank. Federal income taxes can also be deferred on the interest they earn - for up to thirty years. Here the similarity ends. Unlike EE bonds that are sold at a discount from face value, I Bonds are sold at face value. Currently, the face value of the various denominations are $50, $75, $100, $200, $500, $1,000, $5000, and $10,000. The government says that this should make it easier to keep track of the growth of the bonds, and this is important because the bonds not only carry a nominal fixed yield, they also carry a variable semiannual inflation yield as well. Ok, lets slow down here a little. First, in May and November of each year, the Treasury Department announces the fixed rate of return for new bonds. These fixed rates will continue for the life of the bond. Also in May and November of each year, the semiannual inflation rate is announced and this rate is added to the fixed rate until the Treasury announces a new inflation rate 6 months later. The semiannual rate itself is based on changes in the Consumer Price Index for all Urban consumers. Increases in value occur the first day of the month and interest is compounded semiannually. The bonds will earn interest for up to 30 years, but are redeemable after just 12 months. However, if you do cash them in during the first 5 years, there is a penalty equal to 3 months earnings. In person, you can purchase up to $30,000 of bonds annually. But, because the government almost never does things in a straightforward manner, you can purchase an additional $30,000 in I bonds by going through Treasury Direct. Anyone with a valid Social Security Number can purchase I bonds, and they can be registered in single or joint ownership. Series EE bonds cannot be exchanged for I Bonds. Finally, if youre like most Americans who have difficulty naming the various visages on U.S. currency, youre probably going to fair no better with the 8 Americans featured on the I Bonds. For the record, heres the list - $50 - Helen Keller; $75 - Dr. Hector P. Garcia; $100 - Dr. Martin Luther King, Jr; $200 - Chief Joseph - Nez Perce; $500 - General George C. Marshall; $1,000 - Albert Einstein; $5,000 - Marian Anderson; $10,000 - Spark Matsunaga, Yeah, I know. I had to look up a couple myself. If you have any questions or comments, Chip would love to hear from you. You may contact him by email at dahlkefinancial@sbcglobal.net. You may also contact him at the Living Trust Network. Its web site is http://www.livingtrustnetwork.com. Copyright 2005. Living Trust Network, LLC. All Rights Reserved. About the Author: Glenn ('Chip') Dahlke, a senior contributor to the Living Trust Network, has 28 years in the investment business. He is a Registered Representative of Linsco/Private Ledger and a principal with Dahlke Financial Group. He is licensed to transact securities with persons who are residents of the following states: CA. CT, FL, GA, IL. MA, MD. ME, MI. NC, NH, NJ, NY.OR, PA, RI, VA, VT, WY. Cashing Savings Bonds

Get your Bonds questions answered... Subscribe to our Bonds Newsletter FREE! Your First Name: Your Email Address: Enter above security code

Home  |   Bonds Blog  |   Ask the Bonds Expert  |   Bonds Archive  |   Bonds RSS Feeds  |   Advertise  |   Sitemap