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There has been a record demand for Series I federal savings bonds, an inflation-protected and virtually risk-free asset that offers an impressive 9.62% year-over-year yield until October.
However, it’s not easy to buy I bonds through TreasuryDirect, a 20-year-old platform managed by the U.S. Treasury Department, financial advisors say.
“It’s like going online for the DMV,” said Matt Stephens, a certified financial planner at AdvicePoint in Wilmington, North Carolina, who explained that the process of buying bonds is especially difficult for his senior clients.
Inflation I is increasing the demand for bonds
I bond interest has two parts, the fixed rate and the variable rate, which is adjusted every six months according to the Consumer Price Index, a key measure of inflation.
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Since the annual rate rose to 7.12% last November, 1.85 million new savings bond accounts have been opened until June 24, according to a Treasury official.
“We are committed to ensuring that TreasuryDirect users have a positive customer experience,” a Treasury spokesman said, highlighting recent changes such as changing resources, hiring temporary staff and improvements to website and phone support.
“We are developing an updated and modern replacement for the current TreasuryDirect system,” they added.
How do I buy bonds
There are two ways to buy I bonds. You can purchase them electronically through TreasuryDirect, with an individual limit of $ 10,000 per calendar year. You can also buy them on paper with your federal tax refund to make another purchase of $ 5,000 per person.
Before I purchase electronic bonds, you will need to open a TreasuryDirect account by providing your ID number, email address and bank details.
Password login page at TreasuryDirect.gov.
However, you want to keep your account number and password secure, as several failed attempts can block your account. To do this, a customer service call must be made, and there is currently a “higher call volume than usual,” according to the website.
Another possible problem is that you can’t trust some password managers to automatically fill in your credentials because part of the login requires you to type the password with the cursor on the virtual keyboard.
Some accounts require additional identity verification
Tommy Blackburn, a Richmond, Virginia-based CFP and senior financial planner at Mason and Associates, who often helps clients buy I bonds, said one of the main pitfalls is additional identity verification.
In some cases, investors must fill out an account authorization form to prevent fraud, according to a Treasury official. To do so, it requires the form to be signed at a bank or credit union, stating “with signature guarantee” before mail is sent.
“In our experience, it can be very difficult to secure a signature guarantee from large and local financial institutions,” Blackburn said. However, a Treasury official said they are working to extend the certification to any notary.
There are additional steps to change your bank account details
There is a similar process for updating bank details in TreasuryDirect that requires a bank change request form, explained Ken Tumin, founder and editor of DepositAccounts.com, who recently completed the process.
When you open a TreasuryDirect account, “you definitely want to keep and choose a bank account that you want to keep for the long term,” Tumin suggested.
I bonds are not suitable for all investors
While the current I bond rate may be attractive, it’s important to know whether these assets match your goals before you buy them, experts say.
There are relatively low purchase limits, with a few exceptions, and a year without access to funds, which is appropriate “as a supplement to your emergency fund,” Stephens said.
How to buy Series I savings bonds through TreasuryDirect
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