Esoteric Finance Corner: Series I Savings Bonds

This is financial advice. I am going to jail

The federal “savings bond” program exists solely to subsidize bar mitvah gifts. I cannot think of a legitimate policy interest in the government borrowing on worse terms than it could otherwise get, in a way that essentially gives away money. In fact, neither can they – this is why they cap the amount that can be invested in this way and make it somewhat of a pain to do so.

The feds allow you to buy up to $10K / year of “Series I” and $10K / year of “Series EE” savings bonds via their (somewhat janky) Treasury Direct website. You can get up to another $5K of each if you have a sufficiently large federal tax refund and mess with some paper forms. The “Series EE” is not a great deal currently, but Series I definitely is, as long as you can afford to squirrel away the cash for a year or more.

Given it’s currently tax season and you may have a bit of extra cash to throw around, this is an ideal time to contribute. Let’s break down the terms, the numbers and the liquidity / tax treatment that make this work.