I Bond (Series I Savings Bond)

Series I Savings Bonds (I Bonds) are U.S. government-issued savings bonds designed to protect investors from inflation. Their interest rate has two components: a fixed rate (set at purchase and lasting for the bond's life) and an inflation rate (reset every 6 months based on the Consumer Price Index for All Urban Consumers, CPI-U). These rates are combined to calculate the composite rate. I Bonds gained massive popularity in 2022 when inflation surged and the composite rate hit 9.62% — the highest since their introduction in 1998. Purchase limits are $10,000 per person per year electronically (via TreasuryDirect) plus $5,000 in paper form using tax refunds. I Bonds earn interest for 30 years, but can be redeemed after 12 months (with a 3-month interest penalty if redeemed within 5 years). They are exempt from state and local income taxes, and federal taxes can be deferred until redemption. I Bonds are virtually risk-free, backed by the U.S. government, making them an ideal inflation hedge for conservative investors.