Bonds are the only investment everyone should have right now
If there’s one investment everyone should own right now, it’s a string of bonds, according to personal finance expert Suss Orman.
A bond’s variable interest rate depends on inflation, which means that the asset currently has a high yield. The CPI rose 8.6% in May, the highest rate since 1981, and the annual bond rate hit a record high of 9.62% through October 2022.
“This is a great investment,” said Orman, who began investing in i bonds in 2001.
With the support of the US government, bonds do not lose their value. Its variable price is determined every May and November. It also has a fixed rate currently at 0%.
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Before you start investing, here’s what the experts want you to know
You can only buy them directly on the US Treasury website at TreasuryDirect.gov. Available amounts start at $25 and you can invest up to $10,000 annually, although there are some exceptions, such as the ability to get up to $5,000 in paper bonds as part of your federal tax refund.
If you want to buy paper bonds instead of electronic ones, you can buy between $50 and $1,000 annually.
You can’t cash the bond for one year, and if you paid one amount before five years, you’ll lose interest in the previous three months.
Orman, host of the “Women and Money Podcast,” said Orman.
A good bet in the age of inflation, if you can afford it
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“Given that inflation may be around to stay for some time, even with a three-month interest penalty in years two to five…it’s still worth it, believe it or not,” Orman said.
Orman said that in addition to making smart investments, also consider your current financial situation and whether or not you can continue to make ends meet.
“People really need to look – what do they want to do versus what they need? What do they want to buy versus what they need to buy?” Orman said.
“If you’re scrambling right now where every penny is going to come out, that’s coming, you’re in a situation where you need to cut back.”
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