Can’t believe I’ve not been aware of these in the past, but I-bonds sure seem like an attractive investment for any funds allocated to “cash”, such as an emergency fund. Lending to the US government, and keeping up roughly with CPI (though I believe that tends to underestimate actual inflation for most of us). Other than some mild restrictions regarding not withdrawing too early, seems like an amazing deal. Currently yielding a whopping 9.62%. True, limited to $10,000 annually per social security number. Almost seems too good to be true. Am I missing something?
No, you’re not missing anything. Yes, buy now for current 9.62% annualized rate. Best guesstimate for new rate in November is around 6%. So guaranteed blended rate of around 7.8. Plus there are ways to exceed the $10,000 through gifts and trusts.
TIPS are another possibility. The 5-year TIPS is currently yielding inflation plus 1.36%.
“The 5-year TIPS is currently yielding inflation plus 1.36%.”
Shorter maturity TIPS look even more attractive, at least on an annualized basis. For example TIPS maturing Jan 15, 2023 are priced for a yield to maturity of 3.18%, plus inflation. If annualized inflation over the next four months is 6%, then the the total return over the next four months will be about 3%, or 9% annualized. I doubt that the S&P 500 will return that much over the next four months.