Inflation is seldom a good thing.
But when it comes to investing, the U.S. Treasury Department has a downright fantastic inflation opportunity. You can buy bonds that pay 9.62 percent interest—tax-deferred—with no downside risk and no state or local income taxes when you cash them in.
If you buy now, you earn 9.62 percent for six months, guaranteed. At the end of six months, the Treasury Department:
- adds the interest you earned to your principal, and
- pays interest on your new principal balance at the new rate it will determine this year, on November 1.
Example. You buy $10,000 of Series I bonds on September 24. You earn 9.62 percent for six months for a total of $481 ($10,000 x 9.62 percent ÷ 2). On March 24, your principal balance is $10,481 ($10,000 + 481).