If there’s one investment everyone should have right now, it’s a Series I bond, according to personal finance expert Suze Orman.
The bond’s floating interest rate is inflation-based, meaning the asset is currently earning a high yield. The consumer price index rose 8.6% in May, the highest rate since 1981. Bond I’s annualized rate is a record 9.62% through October 2022.
“It’s a fabulous investment,” said Orman, who started investing in I bonds in 2001.
Backed by the US government, the bond does not lose value. Its variable rate is fixed each month of May and November. It also has a fixed rate currently at 0%.
Learn more about Investing in You:
Suze Orman’s warning about quitting amid the big quit
These Strategies Will Help You Pay Off Your Credit Card Debt As Rates Rise
Before you start investing, here’s what the experts want you to know
You can only buy them directly from the US Treasury Department website at TreasuryDirect.gov. The amounts available start at $25 and you can invest up to $10,000 each year, although there are a few exceptions, such as the ability to get up to $5,000 of paper I bonds as part of your federal tax refund.
If you want to buy paper bonds instead of electronic bonds, you can buy between $50 and $1,000 per year.
You can’t cash the bond for a year, and if you cash one before five years, you’ll lose the previous three months of interest.
While the best thing to do is to hold onto the bond for five years or more, if you don’t think you can do that, don’t let that stop you from buying, said Orman, host of the show “Women and Money”. Podcast.
A good inflation-age bet, if you can afford it
Pictures of people | Getty Images
“Given that inflation is likely here to stay for a while, even with a three month interest penalty in the second through fifth year…it’s still worth it, believe it or not,” he said. Orman said.
In addition to making smart investments, also consider your current financial situation and whether or not you can continue to meet your expenses, Orman said.
“People really need to ask themselves what do they want to do versus what they need to do? What do they want to buy versus what they need to buy?” said Orman.
“If you’re scrambling now where every penny is going out, coming in, you’re in a situation where you have to cut back.”
REGISTER: Money 101 is an 8-week financial freedom learning course, delivered weekly to your inbox. For the Spanish Dinero 101 version, click here.
CHECK: Meet a 34-year-old man who has sold over 11,000 items on Etsy and earns nearly $3,500/month in passive income with Acorns+CNBC
Disclosure: NBCUniversal and Comcast Ventures are investors in Tassels.