I found this on
http://einvesting.com/about1035.html and I quote:
Quote:
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In general, be careful with i-bonds. They pay a fixed amount above the inflation rate, adjusted every 6 months. Currently they pay 1.2% above the inflation rate of 3.6% for a 4.8% yield. You pay federal income tax on the interest when you cash them out (or 30 years, whichever comes first). The 1.2% represents 25% of the interest so the person in the 28% bracket ends up losing.
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Is the 25% vs 28% part true ? We might be in the 28% bracket next year since we don't have a house to do itemized deductions anymore. We certainly won't be leaving the money in the I-bonds for more than 5 yrs since we'll need it to purchase the house.
Sue, when I said ED I meant Emigrant Direct account that pays 4.0% interest right now and your money is completely liquid.