GLOSSARY · BUDGETING, SPENDING & SAVING
I bond (Series I savings bond)
A U.S. savings bond whose rate combines a fixed rate set at purchase with an inflation rate reset every six months, so its value keeps pace with consumer prices. It cannot be cashed in the first 12 months, loses the last three months of interest if cashed within five years, and has a yearly purchase limit. Interest is free of state tax and federal tax is deferred until the bond is cashed.
Also called: I bonds, Series I bond, inflation bond, Series I savings bond
FORMULA
Composite rate = fixed rate + 2 × semiannual inflation rate + fixed rate × semiannual inflation rate
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CHAPTER · INCOME FUNDAMENTALS · FOUNDATIONSLow-Risk Places to Keep CashCHAPTER · INVESTMENT FOUNDATIONS · FOUNDATIONSHow Bonds WorkRELATED TERMS
SOURCES
- I bonds. U.S. Department of the Treasury, TreasuryDirect.