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If you’re trying to max out the yearly purchase limit for Series I bonds, your tax refund offers an opportunity to buy even more.
On the other hand, you should consider your goals and weigh alternatives first, experts say.
An inflation-protected and nearly risk-free investment, I coheres are currently paying 6.89% annual interest on new purchases made through April 2023, the third-highest rate since they were announced in 1998.
While the annual purchase limit is generally $10,000 per person for electronic I bonds, you can buy another $5,000 in paper I treaties with your tax refund.
Stealing paper I bonds with your tax refund may make sense if you’re eager to purchase as much as possible, said Ken Tumin, superior industry analyst at LendingTree and founder of DepositAccounts.com, a website that tracks I bonds, among other assets.
There are two districts to I bond interest: a fixed rate, which may change every six months for new purchases but stays the same after the controls are bought, and a variable rate, which changes every six months based on inflation. TreasuryDirect announces new rates every May and November.
Funds, high-yield savings are smart alternatives
As the Federal Reserve continues to Downsides of paper I bonds
Keil said it’s also foremost to consider the downsides of purchasing paper I bonds tied to your tax return.
“You don’t have much control over the timing of the ms I bonds purchase, so don’t expect to get the current 6.89% rate unless you file your return well before the deadline,” he conveyed.
What’s more, paper I bonds must be converted to electronic form before redemption. “It’s a long process,” he suggested. “It’s not liquid at all.”
