The Oddball Bond That Pays a Safe 7% Yield

Get in Now and Take Advantage of the “Tax Refund Loophole”

Markets are shaky.

The economy is on the ropes.

And the folks in charge of it all admit they can’t beat soaring inflation.

It’s no wonder folks are yearning for safe, steady income… a yield big enough to matter, yet won’t go away on a whim.

I’ve got it.

It currently pays more than 7%…

It’s legally guaranteed…

And, get this, it’s available to only the little investor.

That’s right, the most a person can put into these bonds is a mere $10,000. But anybody can get in with as little as $25.

With numbers like those, the big boys of Wall Street aren’t allowed in the game. This sort of guaranteed income is off the table… which explains why most folks have never heard of them.

I’ll show you what they are and how to get them… and I’ll even give the pros and cons to this unique investment opportunity.

Perfect Timing

But first, let’s remember why a person might want a bond that currently pays more than 7%.

With bonds, we are legally guaranteed a payout. As long as the entity (a company or a government) still exists, it is obligated to pay its bondholders before anybody else.

The yield is often based on risk.

Ultra-short, ultra-safe government bonds pay just 1% or 2%… if that.

Often, when a bond yields 7%, it’s because there is great risk involved. It could be from a company that already has a lot of debt. It could be from a company with a risky business model. Or maybe the company’s sales are slumping.

Most healthy companies pay about 4% or 5% on their bonds. And corporate debt – because companies can’t print their own money – is riskier than debt issued by Washington… which loves to print money to pay off its IOUs.

But here’s the thing with this big yielder I’m telling you about.

It’s the safest of the safe. It’s issued by the U.S. Treasury.

You will get your money back. And if inflation stays at today’s level, these bonds will pay more than 7% – guaranteed to double your money in just 10 years.

These oddball bonds are called Series I bonds.

Different… and Better

They are much different from other bonds issued by Uncle Sam.

For one, they come with two interest rates.

This is key…

Series I bonds come with a fixed rate and a variable rate based on inflation. The latter changes based on the consumer price index (CPI) every six months.

So the higher prices climb… the more yield these bonds pay.

Until they are adjusted once again on May 1 (when it’s presumed the yield will automatically increase once again), the current composite rate for Series I bonds is 7.12%.

But there is some risk. If inflation falls, the variable rate will fall with it. If the CPI shows prices are rising at just 3%, then these bonds will yield the base rate plus 3%.

And here’s an interesting part…

If deflation kicks in, these bonds will protect you too. Their total yield will never fall below zero.

So you get ideal inflation protection with zero downside.

Unless Washington goes insolvent, you will get your money back.

Cashing Out

And when it comes to getting your money back, these bonds come with some unique rules of their own. Again, they’re quite different from the typical bonds talked about so much in the financial press.

For one, you can’t sell a Series I bond the first year you own it.

It must be held for 12 months.

After that, you can sell it at any time you want. But if you sell within the first five years, you will forfeit the last 90 days’ worth of interest payments.

Interestingly, there’s no fixed maturity or cash-out date on these bonds. In other words, they’re not denoted in time periods like traditional debt. There’s no five-year or 10-year Series I bonds. But they all have a maximum holding period of 30 years.

The reason for that difference comes in the way the payouts are accrued.

Unlike a traditional bond, you won’t get an interest check in the mail every six months. Instead, the interest you are due is calculated each month and added to the bond’s principal value. And, in a big nod to the power of compounding, each new interest payment is based on that new (higher) principal value.

Clearly, if you hold on for the full 30 years, you could be getting some serious interest payments.

Tax Advantages

For the tax wonks, there’s another big benefit.

You don’t have to pay state or local tax on the income you get from your Series I bonds. Try that with an ordinary certificate of deposit (CD) or bond.

And here’s another little loophole you won’t hear many folks talking about…

Yes, the “limit” is $10,000 worth of Series I bonds each year. But there is a way around that figure… and it has to do with something many folks are working on right now.

It’s a little-known loophole that allows a person to buy an extra $5,000 worth of these bonds using the proceeds from a tax refund.

With just a few clicks of a mouse, you can turn a refund into an inflation-busting, 100%-guaranteed, high-yielding investment.

With prices of just about everything soaring… and with more price hikes surely on the way, putting a few dollars into Series I bonds is a smart move.

For investors with a longer-term focus who would typically park some “safe” money into a CD, I urge you to check out this option. A 7% yield is certainly a heck of a lot more than what any bank is paying on its CDs.

Series I bonds truly are a unique and smart way to protect and, better yet, increase your spending power.

There’s only one place to buy them… straight from the U.S. Treasury.