By the way, i-Bonds are an excellent fixed-income investment for most people. I like having i-Bonds, but not in an IRA. Another value indexed to inflation are the treasury's inflation-protected securities, better known as TIPS. These default-free securities are also designed to protect the value of your money against the ravages of inflation.
The big drawback of TIPS is that Uncle Sam requires that TIPS owners who are in a taxable account pay income taxes on inflation-adjusted earnings before receiving part of the inflation-adjusted money at maturity. That's why TIPS work best in a tax-protected account, such as an IRA or a Roth-IRA. It would be better to use TIPS on your Roth. You have to use a broker if you want to be the direct owner of the TIPS.
A number of branded mutual fund companies also sell funds comprised exclusively of TIPS. You can also purchase FDIC-insured short-term certificates of deposit at your bank for your Roth account. You wouldn't have any credit risk with FDIC insurance. You would earn a decent interest rate.
And if CD conditions are kept short, profits could always be made around the prevailing market interest rate. A lot is happening in the world. Despite everything, Marketplace is here for you. You rely on Marketplace to break down world events and tell you how they affect you in an accessible, fact-based way.
We rely on your financial support to continue to make this possible. In addition, trusts and estates may purchase I bonds in some cases, but corporations, corporations, and other organizations may not. I bonds have quickly become a powerful way for millions of Americans to generate solid guaranteed returns in a volatile investment market. That said, many IRA Financial customers using a self-directed IRA LLC or Solo 401 (k) plan consider it worth applying for I bonds with Treasury Direct.
Treasury regulations say that you cannot open an account to purchase savings bonds electronically through Treasury Direct in the name of an IRA. Therefore, as long as the IRA has a tax identification number, it could apply for an I bond through Treasury Direct. This protection against inflation for Type I bonds has caused a stir among savers over the past year, as they reached their highest level in about 40 years. Since an IRA is not an individual and does not have a social security number, generally a Roth IRA, an SEP IRA, or a SIMPLE IRA cannot directly own a bond I.
Just as technically an IRA can be treated as a trust and use Treasury Direct to buy bonds I, a retired investor can set up a self-directed IRA LLC to buy bonds I.