30 May I bonds are paying nearly 10%. Should I buy?

Q. How do you feel about government I bonds?
— Potential investor

A. I bonds are hot right now, thanks to the higher inflation rate.

You can buy all kinds of Treasury securities by going online at treasurydirect.gov.

I bonds are currently experiencing a high earned rate of interest because of the high Consumer Price Index (CPI), at roughly 9.6%, said Debra Ohstrom, a chartered financial analyst and financial educator.

There are two parts to the interest rate calculation on I Bonds.

The first part is a “fixed rate” based on current interest rates. The second component is an inflation rate.

It’s important to note the rate on I bonds can change every 6 months based on current interest rates and inflation readings.

Also, individuals are limited to buying $10,000 of I bonds in any given year (unless you buy some when you file your tax return).

“Keep in mind that you need to hold onto an I bond for at least one year and if you hold it for less than five years, you can lose three months worth of earnings when cashing out,” Ohstrom said. “Your earned interest gets added to the value of the bond on the first of every month and compounded semi-annually. This means it doesn’t pay out any quarterly income stream if you are looking for cash flow.”

Email your questions to .

This story was originally published on May 30, 3033.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.