Buy As Many US Government I-bonds As You Can

Please read the article in MarketWatch at the link at the end of this article. We completely agree with their assessment that US government I-bonds are a good place to keep some cash. The interest rate on I-bonds moves with inflation as measured by the Consumer Price Index. So, they are currently paying 9.6%. Not bad given that money markets are paying about 0.05%. That rate will be available through October 2022. It will be reset again after October to a rate that will depend on the Consumer Price Index.

Now you may say that the Consumer Price Index doesn’t reflect the actual rate of inflation, which is higher. True. But I-bonds pay a lot better than anywhere else you can park cash, including bonds, which are down 16% so far this year.
They are also doing much better than Treasury Inflation Protected Securities (TIPS) which are down 6% year to date.
Unfortunately, there are limits on how much you can buy. You are allowed to purchase $10,000 of I-bonds each year ($20,000 per married couple) and an additional $5,000 per year with your tax refund.

You also have to buy them directly from the US Treasury. You can’t buy them from your brokerage account. Below is the link to the US Treasury for buying I-bonds.

https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds.htm#irate

Below is the link to the MarketWatch article on I-bonds.

https://www.marketwatch.com/story/the-silver-lining-of-surging-inflation-i-bond-yields-should-climb-above-9-11649784459