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With inflation taking bigger bites out of investment returns in recent months,more people are snapping up Series I savings bonds, yielding a tempting 6.73 percent.
In early December, that rate was well above those of other cash safe-havens, including money-market accounts and certificates of deposit. What makes these government-backed bonds so attractive is that part of their yield is bumped up or down twice a year (Nov. 1 and May 1) in line with the Consumer Price Index, the government's key inflation indicator. The other part of the yield is now fixed at 1 percent, which ensures a minimum income even if inflation evaporates down the road.
I Bonds are exempt from state and local income taxes, and you can defer federal income taxes until redemption. So they're great if you've maxed out your 401(k) contributions and still want to defer taxes, says Jason Papier, a principal at PW Johnson Wealth Management, a fee-only financial planning ...