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I Bonds – What you Need to Know

Inflation, as measured by the increase in the consumer price index (CPI), is at its highest level in 40 years. Coupled with the recent stock market sell off, many Americans are considering investment opportunities to help protect against both volatility and inflation. Enter Series I savings bonds.

What is an I Bond?

According to the U.S. Treasury, Series I savings bonds, otherwise known as “I bonds” are bonds that earn interest based on combining a fixed rate that stays the same for the life of the bond, and an inflation rate that is set twice a year.” Some of the potential benefits of I bonds are that they are backed by the U.S. government, their value doesn’t go down, and they offer tax benefits. In addition, they provide inflation protection and currently pay 9.62% in interest for the 2022 calendar year (for bonds issued May 2022 through October 2022).

It is important to note that I bonds cannot be purchased through brokerage accounts. If you are interested in buying an I bond, they can only be purchased through the U.S. Treasury Department’s website.

I bonds are a long-term investment, maturing after 30 years, unless sold beforehand. Cash can be redeemed after 365-days of the initial purchase, but investors forfeit the last three months of interest earned if they liquidate their investment within five years. From a tax perspective, investors can defer declaring interest until maturity or cashed out.

Things to Consider – I-Bonds vs TIPS

Treasury Inflation-Protected Securities, or “TIPS,” are another option for investors looking for inflation protection. Like any investment, there are things you need to consider before purchasing either of these securities:

  • Interest Rate Changes – While I bonds’ interest rates are adjusted for inflation, TIPS’ principal values are adjusted to reflect the current inflation rate.
  • Purchase Limits – With I bonds, there is a $10,000 purchase limit. Investors may purchase an additional $5000 of I bonds through tax refunds. TIPS, on the other hand, have a substantially higher limit and no annual purchase limits.
  • Tax situation – Investors who buy I bonds don’t owe taxes on the accrued interest until they sell or the bond matures. However, TIPS holders are liable for federal income tax on interest income and growth of principal.

Make sure to chat with your Southwestern Investment Group advisor to help you determine what’s best for your situation. Also, if you need assistance navigating inflation, check out these best practices.

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Jeffrey T. Dobyns

CFP®, CLU, CHFC

President, SageSpring 

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Jeffrey T. Dobyns

President, SageSpring 

Beyond crunching numbers and investment strategies, at SageSpring, we’re about building relationships. When you encounter Founder & President of SageSpring, Jeff Dobyns, it’s easy to understand why this is at the very heart of who we are as a firm. You won’t find stuffy formalities with Jeff; instead, you can expect to find him sharing a warm smile, communicating a compelling vision, or patiently untangling life’s complex challenges with clients. He believes in truly getting to know clients, understanding their aspirations and priorities, and navigating their financial plans with a tailored, comprehensive approach. Our team members have often been caught taking notes on Jeff’s effortless relationship skills from a distance, and we admire them for striving to learn from one of the best. 

Jeff’s financial expertise and wisdom are the perfect match to his innate people skills. Jeff holds the prestigious CERTIFIED FINANCIAL PLANNERTM certification, Chartered Life Underwriter (CLU®), and Chartered Financial Consultant (ChLU®) designations, and has held executive positions with financial planning firms for more than two decades. 

His dedication extends beyond the office to the boardroom and the local community, where Jeff is passionate about giving back. He serves as Chairman of the Board of Men of Valor, a prison ministry and mentoring program. Jeff also serves on the board of Send Musicians to Prison, which shares hope, healing and restoration with the imprisoned through musicians & artists. Jeff actively supports other initiatives in the community by sitting on the board of The Signatry of Middle Tennessee and the Halftime Institute of Nashville. 

Witnessing his four children, Gracyn, Hunter, Tanner, and Logan, excel on the field is almost just as rewarding, if not more, than celebrating the victories of seeing his clients overcome obstacles and build wealth. Spending weekends boating on the lake, hiking mountain trails, and fishing with his family are the moments Jeff cherishes most. It’s this grounded perspective that reveals the true meaning of wealth for Jeff: not just numbers on a page, but the freedom to create experiences that enrich your life and the lives of those you love. When you choose the Dobyns McMillin Wealth Team, you choose more than financial expertise. You choose a partner who champions your dreams, celebrates your victories, and walks besides you on the path to achieving your unique goals.

**Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER TM, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.