Smart Giving: Inflation-adjusted Savings Bonds

The holidays are here which means the interest rate on I Savings Bonds has changed. I Bonds are currently earning 4.28% through April 2008.

I Savings Bonds are government-issued bonds that earn interest each month, and the interest is compounded every six months. The I Bond is currently providing a higher return than the EE Bond (which is earning 3.00% through April 2008). Part of the interest rate on these bonds is tied to the inflation rate, which is adjusted every six months. Since becoming available, the I Bond has been very popular; sales of over $3.2 billion were reported in the first year.

What you should know about the I Bond:

* You can buy I Bonds at face value; for example, you would pay $50 for a $50 bond.
* Earnings from your I Bonds are exempt from state and local income taxes.
* Federal income taxes can be deferred for up to 30 years, or until you cash your bonds in, whichever comes first.
* You can earn interest on them for up to 30 years, and can cash them out after five years, without losing interest. You will lost three months' interest if you cash them in sooner.)
* You can now buy savings bonds on the Internet at TreasuryDirect.gov.

I Bonds are a great gift for kids; show them how to check the interest rate and calculate the value of their savings bonds twice a year.

For more information on I Bonds, go to www.savingsbonds.gov, or call 1-800-487-2663.

Happy Holidays from WISER!

I Bonds feature prominent Americans such as Helen Keller ($50 I Bond), Dr. Hector Garcia ($75 I Bond), and Dr. Martin Luther King, Jr., here on the $100 I Bond.