Faith & Finance

Watch cable TV for awhile and you’re bound to see a program about buried treasure in the Sierra Mountains or off some Caribbean island. Ever wonder why the searchers hardly ever find anything? An even better question might be what on earth does buried treasure have to do with government bonds and your savings account? Today, Kingdom Advisors President Rob West answers those questions and more. Then it’s your calls at 800-525-7000. 

·      The Efficient Markets theory. In the stock market it means that the value of a stock always reaches its perfect selling price barring any outside factors. Now, applying it to buried treasure it works like this the bigger the treasure the more likely someone else has already found it.

·      A lot of folks are passing up some “buried treasure” in the form of government I bonds. Right now about the best you’ll get with your savings or emergency fund in an online bank is around 0.5% interest. Brick and mortar banks are paying far less. But, right now, Series I savings bonds are currently offering 1.68% that’s more than 3 times the online bank rate, and it would pay you $118 a year for a $10,000 emergency fund.

·      An I bond is just another type of U.S. savings bond and it’s guaranteed to keep up with inflation. As with other bonds you get a fixed rate set for the life of the bond. And right now it’s right around zero.

·      If you own an I bond you’ll get semi-annual rate adjustments. In other words, two per year. Right now, that rate change is 0.84%. 

·      Double that because you get two of them and your annual interest is just under 1.7%. There’s your buried treasure. And of course, I bonds are backed by the full faith and credit of the U.S. government.

·      Also, interest on I bonds is free from state taxes and possibly federal taxes if you cash in the bond in the same year you pay for college expenses depending on your income. 

·      They do come with a few restrictions. You have to hang onto them for at least 12 months before you can cash them in. That means you shouldn’t put all of your emergency savings into I bonds in a single year.

·      Also, you can’t buy I bonds through your broker or bank, you can only buy them online at TreasureDirect.gov.

·      There’s nothing wrong with putting a portion of your savings into an I bond if you’re comfortable knowing that you can’t touch it for at least 12 months. If you can do that, you’ll earn almost $120 extra per year on $10,000, sort of like finding buried treasure.

Here are a couple of questions we answered from our callers on today’s program:

·      My daughter has been doing my taxes the past few years. She told me that I do not need to file taxes this year since social security is my only income, is that correct? 

·      I had an accident a couple years ago and I will be receiving a settlement soon. What is the wise thing to do with the money I will receive?

·      I recently graduated from college. All of my loans are on hold because of Covid. What is the best way to pay these down?

·      How do you know which charities are legitimate?

·      Is it wise to refinance right now?

Ask your questions at (800) 525-7000 or email them to Questions@MoneyWise.org. Visit our website at MoneyWise.org where you can connect with a MoneyWise Coach, purchase books, and even download free, helpful resources like the MoneyWise app.

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