I Bond Rates Are 3.98% Today. Should You Invest? do sex sex to

Getty Images With the stock market taking major tumbles recently, low-risk investors might opt for a safer vehicle for their savings: government-issued I bonds. Between May 1 and Oct. 31 of this year, the new interest rate for I bonds is 3.98%. Series I savings bonds became popular when inflation surged in early 2022, earning a record 9.62% back in annual interest.Though today's I bond rate is far less than that, these bonds are designed to keep pace with inflation, earning both a fixed rate for the life of the bond and a variable inflation rate adjusted twice a year. "Together, these components make I-Bonds a flexible investment option for conservative investors who are sensitive to changes in inflation rates," said Stephen Kates, a financial analyst with Bankrate. Though 3.98% isn't the highest annualized interest rate out there, it's comparable to some of today’s best high-yield savings accounts and certificates of deposit.  Given the threat of inflation inching back up with President Donald Trump's tariff agenda, it's worth comparing I bonds with other saving options. Here's what you need to know about how I bonds work and what to consider before you buy them.What are I bonds?Series I bonds are issued by the US government and are designed to protect your money from inflation. When inflation is rising, the value of the dollar decreases over time. For example, if you put $100 in an envelope last January and it’s still gathering dust, its purchasing power is now lower.I bonds earn interest that helps your savings keep pace with the rising cost of living. Starting May 1, the composite interest rate of 3.98% will apply for the first six months after you buy the bond. Inflation adjustments could go up or down after that point. Here’s a rundown of some key details to know about I bonds:I bonds earn two interest rates I bonds have both a fixed rate and a variable inflation rate that together make up the combined rate. When you buy your I bond, the fixed rate will stay the same until you cash it out, but the variable rate will change twice a year. The government sets the inflation rate based on the Consumer Price Index, which measures the average change in the prices urban consumers pay for commonly purchased goods and services. Rates are set twice each yearOn May 1 and Nov. 1, the government announces new fixed and variable inflation rates. For example, on May 1, 2025, the government announced a fixed rate of 1.10% for all I bonds issued over the next six months and an inflation rate of 1.43%. Based on that information, the Treasury Department used a complex formula to calculate a composite rate of 3.98%. Your rate changes based on when you buy the bondWhile the government announces new rates in May and November, your rate changes every six months from the date you bought the bond. This rate change will always take place on the first of the month. So, if you buy a bond anytime in March, your rate will change every Sept. 1 and March 1. If you buy a bond anytime in October, your rate will change every April 1 and Oct. 1.The US government guarantees the investment Security is one of the biggest selling points of I bonds. While corporate and municipal bonds can carry some risks, the federal government's backing protects your money against risk or hacks and guarantees the return of the bonds' principal and interest.You’ll pay taxes on the interest, but only at the federal level Interest earned on I bonds is subject only to federal taxes, and those taxes are deferred until the year you redeem the I bond. That could be an important consideration for higher-income investors in high-tax states.You can’t buy an infinite amount of I bondsI bond purchases are capped at $10,000 per year per Social Security number. You can’t cash in the bond for a while The full term of an I bond is technically 30 years. The minimum holding period for an I bond is one year, which means you can cash in the bond after one year. But even then, you’ll wind up forfeiting some of the interest. If you cash in the bond in less than five years, you’ll lose the last three months of interest. How do you buy I bonds?The easiest way to buy I bonds is at TreasuryDirect.gov. You’ll need to create an account by providing your Social Security number and other information and linking a bank account to pay for the purchase. As of January 1, 2025, I bonds are only available electronically. Are I bonds a good investment?If you’re trying to figure out whether I bonds make sense for your portfolio, there isn’t a universal yes or no answer. Depending on your particular investing goals, there are pros and cons to consider.Pros Interest rate tied to inflation: The US Treasury adjusts the variable interest rate twice a year based on current inflation rates. That means it will maintain its purchasing power.Stability: I bonds are considered safe investments since they're backed by the government and aren't volatile like stocks. If you purchase I bonds with your savings, you'll get secure returns without taking any chances.Exempt from state and local taxes: You don’t have to pay state or local taxes, but I bonds are subject to federal income taxes.​​Cons Lower returns: If inflation drops, the variable rate on I bonds could be quite low. If you want a higher rate of return for your long-term savings, a diversified portfolio of stocks and bonds might be a better option.Holding period: You can’t redeem your bond for the first year. If you cash in before five years, you forfeit the last three months of interest. For liquidity and easy access to your funds, a high-yield savings account is a better option.Other hassles: I bonds aren't the most straightforward savings tool to navigate on the TreasuryDirect.gov site. You also won't get a statement to see your balance, so you'll have to track your investment online.Is now a good time to buy I bonds?With concern about an economic downturn and anxiety over layoffs, many are considering savings strategies to cushion their financial future. I bonds stand out for their top-yielding returns and relatively low risk. As investments backed by the US Treasury, you're guaranteed to secure at least your principal, so they'll never lose value. I bonds' safety makes them a good addition to a diversified portfolio since they'll preserve your purchasing power. "Investors looking for stability and reliability from their investments may want to blend I bonds with other fixed-income options to strike a balance between the inflation protection and stable, predictable income," Kates said.If you want to grow your money faster, I bonds won't do the trick. You’re better off focusing on more aggressive investments while keeping your liquid funds in a high-yield savings account or building a CD ladder.Today's I bond interest rate isn't as appealing as it was in 2022. If the Federal Reserve cuts rates this summer, I bond rates and other savings rates will fall. You can now find more competitive rates on some high-yield savings accounts, money market accounts and CDs. Other savings options have significantly fewer restrictions, as well.Where and how to buy I bondsThe most convenient way to buy I bonds is at TreasuryDirect.gov, the government’s site for buying and managing federal savings bonds. Create an account: Be prepared to share your Social Security number, your address and the account and routing number of the bank account you plan to use to fund the purchase. Watch for a confirmation email: You’ll receive your full account number and one-time code to verify your account.Log in and buy your bonds via BuyDirect: If you want to get a bond for someone else -- a child, for example -- you’ll need to specify who will be able to cash it in.Understanding I bonds vs. EE bondsIf you’re thinking about I bonds, you may also consider the government’s other option: EE bonds. These are similar to I bonds in many ways, but there is one notable difference -- the government guarantees that an EE bond will double in value in 20 years.That may sound promising, but it’s important to weigh that against inflation's potential to impact the bond's value. For reference, EE bonds are currently paying 2.70% interest, far short of the 3.98% attached to I bonds.Determine your savings goal before choosing In today’s rate environment, an I bond offers a competitive yield with relatively low risk. But whether I bonds are right for you depends on your financial circumstances and personal savings goals.Consider whether you want to lock up your money for at least one year and forfeit interest if you withdraw funds before the first five years. If you need cash liquidity and easy access to your money sooner, look for a more flexible option. Some of the best high-yield savings accounts earn higher APYs than I bonds right now. If your main priority is locking in a fixed rate for a set period of time, a certificate of deposit might fit your goals more than an I bond.  Recommended Articles Best High-Yield Savings Accounts for April 2025 Best CD Rates for April 2025: Grow Your Money Faster With Up to 4.50% APY Can a High-Yield Savings Account Beat Inflation? The Magic of Compound Interest Is Helping Double My Savings in One Year 5 Ways I’m Thinking Differently About Saving Money