Welcome to the Stay Wealthy Podcast.

I'm your host Taylor Schulte and a few weeks ago, one of our listeners, John R, emailed me asking if I thought I bonds were a good investment.

And while some people have gone as far suggesting that I bonds are, quote, the best kept secret in America,

I simply told john that they

should be thought of and used just like you would a cd or a money market account and that some

of their limitations actually discourage successful retirement savers from using them at all before

i explain why let's first define what an I bond is in plain English, of course.

So I bonds are a type of U.S. savings bond, and they were created in 1998 by the U.S. Treasury

as a simple way to protect your money from losing value due to inflation.

Eye bonds are able to do this because they have a unique return profile, which is

essentially comprised of two parts, a fixed rate and an inflation adjusted rate. The fixed rate is

determined at purchase and remains the same throughout the life of the bond. And the inflation

adjusted rate, well, it's adjusted regularly to keep pace with

rising prices and combat inflation the US Treasury announces the fixed rate for iBonds every six

months on the first business day of May and the first business day of November the inflation adjusted

rate is also announced every six months on the same schedule,

but unlike the fixed rate, which doesn't change for the life of the bond, the inflation rate can and usually does change on those announcement dates.

Changes to the rate is based on the Consumer Price Index for urban consumers, also known as CPI-U.

Now, these two rates, the fixed and inflation adjusted, are combined and injected into a formula to get us to what's known as the composite rate, or quote, the actual interest rate on your eye bond the equation that makes up

this formula is the fixed rate plus two times the semi-annual inflation rate plus the fixed rate

times the semi-annual inflation rate now let's put some quick numbers to this as mentioned rates

are announced on the first business day of

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