In the current economic climate, with rising inflation rates and increased market volatility, many investors are seeking safer investment options. First, savers turned toward Series I savings bonds, an inflation-protected and largely risk-free asset that's issued by the federal government.
Series I savings bonds are designed to protect your money from inflation. These bonds earn both a fixed interest rate and a rate that changes with inflation. This structure ensures that your investment will maintain its purchasing power over time, even during periods of high inflation.
Comparatively, Series EE Bonds are offering a 2.1% interest rate and a guaranteed 100% return in 20 years. For a decade of deflation, U.S. Treasuries offer lower returns but are considered safe investments.
To start investing in bonds, you need $25. Annual investments of $10,000 in Series I bonds can be purchased electronically. Paper bonds can also be bought, but the investment limit is higher, at $5,000 per year.
In recent news, a $229.6 million senior water revenue bond, series 2023A, was issued. Bond proceeds will be used to finance approximately $24 million of capital projects in the water sector.
The A2 ratings on the Special Obligation Bonds, Series 2023B, are notched two levels below the issuer rating to reflect the risk of annual non-appropriation of pledged revenues. The rating reflects the overall credit quality of the issuer and the structure of the bonds.
Unlike other types of bonds, I bonds aren't available to buy or sell on the secondary market. That means they're not susceptible to price fluctuations, offering an additional layer of stability for investors seeking a long-term, low-risk investment.
Moody's, a prominent credit rating agency, maintains an Aa1 issuer rating and Aa1 rating on the county's outstanding general obligation limited tax (GOLT) bonds. This high rating suggests that these bonds are a relatively safe and secure investment.
Series 2023B bonds and $40 million UPMC Revenue Bonds, Series 2023C, have also been issued recently. Concurrently, Moody's affirmed the A2 rating on the bonds and notes of the University of Pittsburgh Medical Center (UPMC) and its affiliates.
Series I bonds offer several advantages for investors. They provide a hedge against inflation, are exempt from state and local taxes, and can be redeemed after one year, with a small penalty if redeemed within the first five years.
However, there are some limitations to investing in Series I bonds. The investment limits can be restrictive for some investors, and the bonds cannot be bought or sold on the secondary market, reducing liquidity.
In conclusion, Series I savings bonds represent an attractive investment option for those seeking inflation protection and stability in their portfolios. With their unique structure, low-risk profile, and tax advantages, these bonds can serve as a valuable addition to a diversified investment strategy.
