Now is the time to buy Treasury bonds.
- Treasury Notes and Treasury Bonds are an excellent option for investors who are looking for steady returns with minimal risk.
- The I bond protects you from inflation because when inflation increases, the combined rate increases.
Suze Orman is a well-known personal finance expert and author of numerous books on saving, investing, and more. She often advises her followers to invest in New Issue Treasury Notes (NITNs) as a relatively safe and low-risk way to increase their income. But is this really the best course of action? Here’s why Orman continues to think so.
What are New Issue Treasury Notes?
Treasury Notes are an excellent option for investors who are looking for steady returns with minimal risk. The notes are issued by the U.S. government with a maturity between two and 10 years. So they come with a guarantee that you’ll get your money back at maturity plus interest payments during the term of the note. This means you don’t have to worry about any kind of market downturns or other risks, like you would with stocks and bonds.
“New issue” means that you purchase directly from the issuer. For example, you can buy a Treasury Note directly from the U.S. government. Treasury bonds are similar to treasury notes but have a maturity date ranging from 20 to 30 years. Of the different types of treasury bonds, Orman recommends I bonds.
Earn 7% with little risk
I bonds earn interest for up to 30 years, and the interest is exempt from state and local taxes. The interest is also tax-deferred until you take a withdrawal. The interest rate on I bonds has two components: a fixed rate of return and a variable rate of return that is adjusted for inflation every six months.
Currently, the fixed rate is 0.40%. The inflation rate is based on the Consumer Price Index (CPI). With CPI at 40-year highs, the current inflation rate paid out is 6.48%. The combined rate is called the “composite rate” or “earnings rate” and is currently 6.89% when rounding and adding the fixed rate. The only place to buy an I bond is through TreasuryDirect.gov. You cannot purchase them through a typical brokerage.
Suze Orman is right — I bonds are an excellent option for investors who want steady growth with minimal risk. They offer good long-term returns and are backed by the full faith and credit of the U.S. government. This means that you’ll earn close to 7% with very little risk and get real returns on your money, while keeping it safe in a low-risk investment. This makes them an ideal choice for those looking to build their wealth slowly and safely. If you’re looking for a safe and steady investment, I Bonds are definitely worth considering.
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