Last Thursday, the Bureau of Labor Statistics (BLS) released the latest Consumer Price Index (CPI) numbers. And the market’s reaction was a bit premature…
As you probably know, CPI readings measure inflation. And according to Thursday’s report, inflation is at 8.2%.
That’s slightly lower than last month’s 8.3% but still way too high if you ask me. And it continues the trend of elevated inflation we’ve seen this year, which hit a 40-year high of 9.1% in July.
Although stocks rallied after six days of notching losses – the Dow Jones is up almost 3% as I write this – I don’t think we’re out of the woods yet.
The BLS reported that the cost of energy, such as oil and gasoline, was actually lower in September than in August. That kept inflation 0.2% lower.
But as we saw last week, OPEC is reducing oil production, which means energy costs will likely increase and add to inflation in the coming months.
At Intelligent Income Daily, my analysts and I are constantly scanning the market for inflation-beating income opportunities. So you don’t have to deplete your limited resources to afford the same goods for higher prices.
And while we normally recommend dividend-paying companies to help boost your financial resources, today I want to tell you about a special inflation-fighting play that currently yields a juicy 9.62%.
You may think that something with such a high yield would be incredibly risky, but this is actually one of the safest investments you can make right now. In fact, it’s guaranteed by the full faith and credit of the United States government.
There are a couple of catches, though, which we’ll lay out below. You should consider them carefully before deciding whether to store your money in this investment vehicle.
But you must decide soon. The interest rate this play offers changes twice a year. And in November, it’ll go down to 6.47%. You can lock in the higher rate for six months by acting before then.
An Investment That’s “Fully Backed”
What is this fantastic investment? That would be the Series I Savings Bond.
Now before we go further, I want to make sure your eyes don’t glaze over when you hear “bonds.”
They might not sound thrilling, but bonds are among the most reliable fixed-income instruments out there. And in today’s volatile, high-inflation environment, they can really bolster your portfolio.
Companies and governments sell bonds to finance their operations in exchange for interest and repayment on a fixed date. Think of them as an IOU to be paid back to you later.
And no bond is safer than one issued by the U.S. government – like the Series I Bond.
First issued in 1998, it has a special feature that makes it extremely attractive today. Its interest rate is linked to the CPI.
Simply put, on top of paying a fixed rate, it also calculates an interest rate twice per year that goes up as inflation does.
And since inflation remains near sky-high levels, this bond currently pays interest at very high rates.
But before you fork over your cash, you should know a few things about investing in bonds. They’re not like stocks, and you can’t get in and out of them as easily.
My goal is to always protect your profits. So I want to ensure you’re informed of all the particulars before considering whether bonds are right for you.
Are the Limitations Still Worth the Reward?
Here’s the information you need to know about the Series I bond BEFORE you invest in it…
To purchase this bond, you must go directly to the U.S. Treasury website at treasurydirect.gov. There you can set up an account, link to your bank account, and make your purchase.
It’s a 30-year variable rate bond. In this case, that means the interest rate you get will change every six months, depending on inflation. So if inflation slows down, the interest rate will also decline.
The interest from the bond doesn’t go straight to your bank account. Instead, it accrues with the bond until you redeem it – tax deferred until redemption.
The minimum holding period is one year. Once you make this purchase, you cannot get your money back before the 365-day mark. No ifs, ands, or buts.
Moreover, you get penalized three months’ interest for redeeming it between one and five years. It’s not until you’ve held it a full half-decade that the penalty goes away.
You can buy as little as $25 or up to $10,000 worth of Series I Bonds annually.
If you’re okay with those restrictions, I believe this is one of the best deals and safest investments around. As long as you have enough additional money saved up and can leave the bond sum untouched for a year.
Remember: With a minimum purchase of $25, you don’t need to lock up a large sum to take advantage of this setup.
Plus, you can partially redeem the bonds in increments of $25 or more any time after that initial one-year period. That makes them almost as liquid as a savings account or certificate of deposit (CD).
Even if you have to pull your money out before five years and earn a penalty, you’ll still earn at least 5%. That handily beats the rates banks offer on savings accounts (up to 3%) and CDs (around 3.25% being the highest).
Just don’t wait too long to invest if you think this opportunity is right for you… The 9.62% rate is only available for a couple more weeks and will drop to 6.47% on November 1. You’ll lock in the higher rate for six months if you buy before then.
If tying up your money in a long-term bond isn’t for you, don’t worry. Bonds aren’t the only safe way to earn a high yield in today’s environment.
There’s a whole world of little-known and even worse-understood investment ideas out there. And we can find plays within them that align perfectly with our goals here at Intelligent Income Daily: To help you boost your bottom line, regardless of market conditions.
That’s why I’m excited to hold a free event on Wednesday, October 19, at 8 p.m. ET. I’ll share a unique strategy you can use to get paid contractually guaranteed income dozens of times every year.
If you’re interested in finding unique ways to beat inflation, sign up now – for free – to join me. And if you upgrade to VIP status (also free), I’ll send you a brand-new report titled “My No. 1 Recession-Proof Investment.”
No matter what happens with the markets tomorrow, I want to give you the tools to make enough income to beat inflation and volatility at the same time. So I look forward to seeing you there.
Happy SWAN (sleep well at night) investing,
Editor, Intelligent Income Daily