How Do I Buy I Bonds To Profit Over The Long-Term?

I Bond Investing Can Be Easy And Profitable

An I Bond is an inflation-linked savings bond that is issued by the United States Treasury. These types of bonds are similar to other government-issued securities such as Treasury bonds and T-bills in that they are backed by the credit and financial power of the United States government.

I Bonds are attractive investments due to their near zero risk of default, providing safe investments for people with a lower risk-tolerance, while also providing steady inflation adjusted income. You may have a lot of questions concerning these types of bonds and how do I buy I Bonds is probably a top question.

Before investing it is important to take a few preliminary steps, including learning how I Bonds work and their benefits, and how they can fit into your investment strategy. Online brokerages such as ETrade and Zecco offer state-of-the-art stock screening tools, and portfolio managers that can assist you in building the investment strategy that is best for you.

Low-Risk Investments

While all government issued bonds are considered highly secure, the I Bond offers an additional level of security. As their interest rates adjust to inflationary changes, these bonds are protected against fluctuations in the rate of inflation while they are owned by the investor.

With a typical fixed-income security, an investor purchases a bond that pays a specific dollar value in interest over regular intervals, which could cause an investor to suffer if they purchased the security prior to a rise in inflation.

Government issued bonds such as the I Bond normally offer lower interest rates than other types of investments due to the fact that they are nearly risk-free. If you are interested in minimizing risk, an inflation-protected security will guarantee a specified rate of return throughout their time frame for investing.

How Do I Buy I Bonds?

Anyone who is over the age of 18 and has a valid social security number can buy I Bonds, and these types of bonds are available online at the United States Treasury’s website. If you are under 18, you can own US savings bonds, unlike other securities.

When your bond is issued electronically you can redeem them online at any time, although if they have been held for less than five years before being redeemed, you will give up interest payments for the most recent three months.

I Bonds can be purchased in amounts as low as $25, and are sold at face value. How you register the bond also determines who owns it and who is allowed to cash it. You will be asked to provide your social security number for tax purposes, even if you will not be the one to cash the bond.

You will assume no tax liability for the bond by using your own social security number, as the social security number of the person redeeming the bond will also be required for tax reasons. You would use the owner’s Employer Identification Number if bonds have been purchased in trust by fiduciaries, public and private organizations, associations, corporations, and other entities as single owners.

Savings bonds, and I Bonds are excellent ways to save for a variety of purposes, and are easily bought and redeemed. Consult with a professional financial adviser, such as the specialists at ETrade, to find out how do I buy I Bonds, and how they can fit into your investment strategy.

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