You Can Invest up to $10K in Popular I Bonds Every Year

But Watch Out for a Potential Scam From a Firm That Promises More…

Another really popular investment these days are I bonds. I for inflation. These are government guaranteed bonds with an interest rate tied to the inflation rate. While we know how high inflation has gone so far this year, I bonds are currently yielding 9.6% in interest. Wow. You go try to find a bank CD paying 9.6%. These things are paying three times more than you can get anywhere in any kind of equivalent guaranteed safe return.

There's a problem with I bonds, however. You're only allowed to buy up to $10,000 of them a year. You can do $15,000 if you use your tax refund. So the good news is these are government guaranteed. The better news is it's 9.6%. But if you're rich, well, so what if you've got millions of dollars and you can only do $10,000 a year? That's not really very good. Now, you could do $10,000 a year. You could have your spouse do $10,000 a year. You got three kids. They could each do $10,000 a year. So great. The five of you can do $50,000 a year in a bond purchases. But still, if you've got millions of dollars to invest $50,000, that's not moving the needle in terms of your asset allocation. 

So along comes this outfit. I'm not going to mention their name because I don't want to give them the publicity. They are now sending emails around the country offering to create and manage multiple corporate entities for you so that they can each get their own tax ID number and they can each go buy I bonds up to $10,000 apiece. They say their service includes providing multiple registered US entities, setting up the account at the Treasury Department through Treasury Direct Online for each of those entities, and doing batch executions of bond purchases across all of these multiple accounts on Treasury Direct. 

This outfit, I don't know if what they're doing is legal, but it certainly shouldn't be. I mean, even if it is legal, I would put it in the category of just because you have the right to do it doesn't mean it's right to do it. This Treasury rule was designed to provide the ability for low income, low asset consumers to earn a little bit of a better return than they can readily get in their bank. It wasn't designed to help rich people get richer by exploiting this loophole. And although this firm seems to be on the legal side of things, I would argue they're certainly on the unethical side. These days we have to watch our back because that's The Truth About Your Future.