The rapid recovery to pre-coronavirus-crash levels of economic activity — in combination with the trillions of dollars of government stimulation — created the perfect storm of accelerating inflation.
There are no guarantees when it comes to investing for inflation. At best, certain investments may be inflation-safe, but returns can never be guaranteed. Still, any one or a combination of the following asset classes may prove to be a winning strategy.
One excellent inflation investment strategy that you can take advantage of in 2022 is to invest in I Bonds. These U.S. savings bonds earn interest based on a fixed interest rate and the inflation rate. The result is an almost risk-free investment that’s backed by the U.S. government and an excellent way to protect your wealth from inflation.
Right now, I Bonds are paying a whopping 9.62%, and you can purchase these bonds at this rate through October 2022. The rate is also applied to the 6 months after you make your purchase. So if you buy I Bonds on June 1st, 2022, the 9.62% rate applies through December 31st, 2022.
I Bond interest compounds semi-annually. Just note that you can only purchase $10,000 of I Bonds per year, and you can’t buy them through your online broker. Instead, you have to visit TreasuryDirect.gov. The minimum purchase amount is $25.
Your I Bonds earn interest for 30 years unless you cash them out earlier. However, you must hold the bonds for at least one year. If you cash out before five years, you lose the previous three months of interest. But at 9.62%, even taking this loss would likely be worth it, and it’s certainly better than just leaving your money in a high-yield savings account.
Also note that the variable inflation rate is calculated twice per year, which depends on changes in the Consumer Price Index. But with inflation rates currently running high, I Bonds are definitely one of the safest and best places to put your money during inflation.