Series I savings bonds offer high rates of return in order to beat inflation
SAN FRANCISCO (KGO) -- Whether shopping for new clothes, filling up your tank or buying groceries, inflation is front and center.
San Ramon's Dennis Larson speaks for a lot of us.
"Groceries have gone up there substantially over the last I'd say five, six months; it's just unbelievable," he says. "So it's like, you know, we're spending double that we did it this time last year."
And investing? It is a tough world on Wall Street and Main Street. Respected financial planner Rick Miller holds a Ph.D in economics and founded Sensible Financial Planning.
Here's how he sums up today's financial reality: "Inflation is a thief and it steals people's purchasing power and it is very difficult to position your assets to protect against inflation."
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Difficult -- but he says there are options. He points to I Bonds offered by the federal government.
"They are a very good deal," he says, "especially right now when inflation is high, but I think in general, they are a good deal because they always protect against inflation."
Series I Savings, or "I Bonds," are paying so much right now they sound like a scam. They are sold direct to consumers through the website Treasury Direct, and on this website the good news is actually buried in the small print. Read through a few paragraphs and you'll find the interest rate is now 9.62%.
"I Bonds basically pay an interest rate that is a real interest rate... plus inflation," says Miller. The "I" in the name means "inflation-linked" as a matter of fact.
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The catch? You need to be aware of a few rules:
- The rate changes every six months
- Your money must be left there for a while
- You are restricted on how many you can buy
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Still, for most of us they are a great deal.
"That's right," says Miller, "I would say that if you have cash reserves, and if you can wait a year to have access to those cash reserves, then yes, it's a good idea, and even if you can't set aside $10,000. Maybe you can set aside $100 or $200 or $500, right? You don't have to put $10,000."
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