Singletary: Here’s How to Get the Hottest Investment of 2022

Government savings bonds for inflation protection are currently like a Birkin bag – highly coveted.

With the stock market crashing and inflation rising, people are desperately looking for a place to park their excess cash.

Paying 9.62%, the relatively unknown Series I inflation-resistant savings bond became a hit with $17.5 billion sold in the six months ending in May, according to the Treasury Department.

That compares to $364 million in I bond sales in all of 2020.

If you have money sitting around and are earning a little more than 1%, if that much, I bonds are an attractive deal.

There are a few things you should know before buying an I bond.

  • You must create an account at TreasuryDirect.gov to buy the bonds.
  • The interest rate on the new Series I Savings Bonds is 9.62% until October 2022.
  • Individuals may only purchase up to $10,000 in e-I Bonds each calendar year. If your purchase exceeds this limit, it may take up to 16 weeks for the Treasury to process the refund. (You can also buy up to $5,000 in paper I bonds using your federal income tax refund).
  • You pay the face value of the bond. For example, you pay $25 for a $25 bond.
  • You cannot cash in the I bond for at least one year. If you redeem the bond before five years, you lose the interest for the previous three months.
  • You must pay federal income taxes on the interest.

Now, here’s a step-by-step guide to buying I bonds that starts with creating an account at TreasuryDirect.gov.

1. Be patient. Seriously. The website says it takes 10 minutes to set up the account. This might be for some people if everything goes right. It wasn’t for me and my husband. It took me 20 minutes to get through the initial setup, and I ended up not being able to set up an account online (More on that later.) It took my husband about 30 minutes with some trickery on his part. If there’s a problem or you make a mistake, the process to fix it is frustrating and archaic.

And in May, so many people rushed to TreasuryDirect to buy the Treasury bonds that the website crashed.

2. Go to TreasuryDirect.gov. Under “Sign in to an account,” click the link to open an account. If you’re not sure how to navigate the process, take the guided tour. I also recommend watching the video on how to set up an account. Many readers said they had trouble setting up their account and are now having trouble getting a live person to help them figure out what went wrong.

3. To create an account, you’ll need a taxpayer identification number, such as your Social Security number. You must also have an address in the United States. You need an email address. You are required to provide at least one phone number.

4. There is a section to add your bank information, which will be the account you will use to purchase bonds. Must be a checking or savings account. Triple check this part before you hit the submit button. Get it wrong and you’ll be transported back several decades to a system that can’t handle online change. (More on that later).

5. You’ll go through a few extra steps to set up your account, including creating a password, choosing a custom image, and choosing some security questions. Be sure to choose a strong password and security questions that cannot be obtained by searching your social media accounts. If you post a lot about your goldie fish or your beloved Champ dog, don’t choose this as an answer to a protected question: What was your first pet’s name?

6. After you create your account, you will receive an email with your TreasuryDirect account number. When you log into your account for the first time, you will receive a one-time password sent to your email. Make sure the image you selected appears. Eventually, you’ll enter the password you’ve chosen.

7. If you successfully create an account, you can buy bonds electronically by transferring money from a checking or savings account.

My husband entered the checking account number incorrectly when we wanted the funds to come from a savings account. You cannot correct account information online. You must print a Change Bank form to edit an existing bank in your TreasuryDirect account.

If that’s not frustrating enough, you must sign the paper form in “the presence of an authorized certifying officer available at a bank, trust company, or credit union and mail it to us for processing.” Phew!

I have triple checked all of my information but have not been able to set up a TreasuryDirect account. Instead, I received an email that said, in part, “We’re having difficulty verifying the information you provided when opening your account. We have not been provided with any information related to account verification issues.”

Now I have to go through some byzantine process to finish setting up my account. The Treasury says that for my protection I must fill out an account authorization form, sign it at a bank “in the presence of a certifying officer” and mail it to a Treasury PO Box in Minneapolis.

Yes, we want strict security measures. Still, what a ridiculous roadblock for people just trying to grow their money. Upgrade security for goodness sake.

“We are working on changes that would allow notarization — instead of an endorsement or guarantee — of the applicant’s signature on the TreasuryDirect account authorization form (Form FS 5444),” a Treasury spokesperson emailed.

Here’s some good news. If you’re having trouble setting up an account, you can buy a Bond I until October 28 and you’ll still get the 9.62% interest rate for six months.

Leave a Comment

Your email address will not be published.