michale ibonds

michale ibonds

please read below and write rebuttal below I-bonds are inflation adjusted treasury bonds that afford the investor the investor a calculated hedge against inflation. They consist of a fixed rate that remains throughout the life of the bond and an adjustable rate that equal to the actual rate of inflation. Because of the adjustable rate component of the I-bond, investors may find the I-bonds to be a better buy. On the other hand it could be more expensive in some circumstances. The I-bond is adjusted twice annually in based on the movements in the Consumer Price Index for all Urban Consumers (CPI-U). So, if inflation occurs the bond would be adjusted upward, allowing the investor to remain ahead of inflation. Other bonds do not offer this benefit. On the other hand the I-bond could also cost the investor money were deflation to occur, causing the adjusted component to drive down the value of the bond. Deflation is just one disadvantage of these types of bonds. There are penalties for early redemption of the bond. If the investor cashes out in less than 5 years they will face a 3 month interest penalty. They also do not pay out the interest for the month in which they are sold. So, if you were to sell an I-bond on the 25th of the month, you would lose the interest from the 1st through the 25th. This is easily remedied though by simply waiting until the first of the month to redeem the bond. In my opinion these disadvantages do not overshadow the benefits of having the adjusted rate component paired with the fixed rat

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