My friends like to ask me for advice on their investments and “check their temperature” on what to do.

These conversations have changed DRASTICALLY in just a short year.

I was reading the most insane text messages in 2021.

“Should I buy Ethereum, move it to Uniswap, swap it for Squid Game Coin, and stake it for 230% APY?!”

“Look at this NFT of a tiger with sunglasses on a surf board. That is going to be worth tens of thousands of dollars some day.”

“AMC is a great buy after dropping 50%… right?”

Everything is backwards in 2022. Inflation is high and liquidity is being sucked out of financial assets via the Federal Reserve. Markets are down seemingly everywhere.

More people are asking about Series I bonds in a financial plan than anything in 2022. That’s a sentence I never thought I’d type.

What a world.

piggy bank

What is a Series I Bond?

These financial instruments are all the rage lately. Let me rephrase that: A US government-issued bond is seemingly the only investment I field questions about now.

Again: what a world.

A Series I bond is one that pays an interest rate that correlates to the stated CPI. There are two components of this rate: fixed and variable.

The fixed rate of interest is currently 0%. It’s never been high, and you have to go all the way back to 2007 to find a rate of interest above 1%.

The variable rate, though, is what is capturing attention. This variable rate is simply referred to as the “inflation rate” and is based on non-seasonally adjusted Consumer Price Index for all Urban Consumers (CPI-U).

This number is locked in for six months. A new rate is formulated at the end of the period.

Series I bonds boasted a 9.62% interest rate since May 2022, when the rate was last reset. There will be a new rate in November, just around the corner.

This 9.62% rate also happened to be the same number as the CPI-U. You would think the CPI-U would always be the same as the I bond rate, but for some reason it’s more complicated than that. The federal government tends to prefer to overcomplicate things. To see exactly how the I bond rate is conjured up, you can view more information here.

Trent, Give me the TL;DR

The too long, didn’t read on I bonds can be summed up like this:

  • I bonds link their interest payments to the CPI rate.
  • The bond is a fixed income instrument issued by the United States federal government.
  • I bonds pay higher interest rates in times of high inflation, lower rates in times of lower inflation.
  • The rate changes every six months.
  • There is a minimum 12 month holding period.
  • The maximum investment is $10,000 for individuals and $20,000 for married couples.
    • Technically, you can add up to $5,000 to that total if you have a tax refund.

“9% Interest? In THIS economy?! Sign me up!”

-All my friends, apparently

Should You Have I Bonds in Your Financial Plan?

I will answer with “it depends.” Like all options in personal finance, there are pros and cons. After ten months of seeing nothing but red on financial statements, it can be appealing to jump into an investment that is “guaranteed” to pay any sort of positive yield.

To sum up, let’s discuss the pros and cons:


  • Ideal for safety of principal with backing of the “full faith and credit” of the United States government.
  • Higher rate of interest than other fixed income products and savings accounts.
  • Makes sense for some intermediate-term dollars.


  • Can’t cash the bond in for 12 months – definitely not suitable for your emergency fund.
  • Fixed rate of interest – no other upside.
  • Not an asymmetric investment, which makes it unattractive for younger people.
  • Interest is taxable at the federal level.

I Bonds In Summary

Yes, I bonds pay a higher rate of interest than other “safe” investments. However, the situations are limited in which I’d recommend their purchase.

Therefore, it doesn’t make much sense to me for a young person or an investor with a high-risk tolerance. There are better investments with a more attractive risk/reward profile that exist today.

But if you do find yourself in this camp, they could be useful for intermediate-term money. This is the hardest timeframe to plan investments for as well.

For example, one friend of mine wants to purchase a house in the next 1-2 years. Since the money will be available in 12 months and you won’t have to worry about principal fluctuation, an I bond could suit this need.

This isn’t something I would recommend for someone wanting to put “extra cash to work.” It absolutely isn’t a place to keep an emergency fund, either.

I hope this quick post is helpful! Visit our blog page to see previous write-ups.

If you have additional questions or comments, feel free to message me on Twitter or LinkedIn.

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Trent is a CERTIFIED FINANCIAL PLANNER™ at Watchdog Capital. He has a passion for traditional finance and Bitcoin, and is eager to see how the two worlds interact with each other.