Question: What Are I Bonds?
Answer: I Bonds are like Series E Savings Bonds, except for one important advantage. The interest rate is adjusted for inflation every six months. Otherwise, they have the same pluses and minuses.
The good news is that I Bonds can be bought with as little as $25, you will never lose your principle, and the interest earned is exempt from state and local income tax. The bad news is your money is tied up for five years, as there is a penalty if you redeem the I Bonds before that date.
The easiest way to purchase I Bonds is online, from the U.S. Government, via Treasury Direct.
