If I understand them correctly, there's some fine-print to pay attention to.
Further to the last point, the rate of return is actually a formula combining a "fixed-rate", plus an "inflation rate". The fixed-rate is fixed for the length of time you hold the bond. The inflation rate changes every 6-months - even on bonds you've already purchased. The current 7.12% "composite" rate is calculated by taking (fixed_rate + inflation_rate) * 2. The current fixed rate is 0.00%, and the inflation rate is 3.56%. The formula results in the 7.12% composite rate quoted.
What this means is you're NOT locking in a 7.12% rate of return. You're only sure to earn the 7.12% annualized rate of return until the next inflation rate adjustment.
You can see this explained in even greater detail at the US Treasury Direct website page explaining rate calculations, HERE.
Yes I’m aware of all that.
You don’t think that it’s a much better deal than a 1 year or 5 year CD? How much are you getting on them.
And do you think inflation is going to come down much over the next few years?
Another benefit of I-Bonds is that you don’t pay state taxes on the earnings, and you can defer the federal taxes until you sell them
Excellent informative comment.
Good job and thank you.