US Savings Bonds have consistently gotten a bad rap. Over the years I purchased small quantities of bonds as the cornerstone of my emergency fund and for tax-free educational savings. Sure, most of the EE bonds I purchased in the mid-90s have earned 4%, which lag behind inflation. But, the I Bonds that I purchased in 2000 are earning more than 8% now! I want to know where anyone can get a guaranteed 8% rate right now on a short term investment?!
Now, to be accurate, the current rate, according to the US Treasury web site is 5.64% and bonds must be held for a minimum of 6 month. So how does that compare to 6 month CDs with purchase prices of less than $50,000? According to Bankrate.com this week that rate was 2.07% and remember that it taxable!
So, if you an individual investor looking for some safe investment options, consider the lowly US Treasury I Bond.