Monday, September 19, 2005


I recently learned about a great offering from the US Department of Treasury called I-bonds. They offer a certain percentage over the inflation rate (currently yields a total of 4.8%), i.e. they are inflation-indexed (indexed to the CPI to be more precise). You can redeem it after anywhere from 1 to 30 years. If you do redeem it before 5-years, you lose 3 months worth of interest, which is still a lot less punitive than most 5-year CDs.

Interest earnings are exempt from state and local taxes. If you are saving for college, you definitely should consider I-Bonds, since an I-Bond used for education purposes is some cases federal tax-free!

Learn more about this at the I-Bond page at the Treasury Department.

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