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Personal finance expert Suze Orman's number one investment right now - YouTube
Channel: CNBC Television
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all right with inflation at the historic
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highs in the stock market choppy our
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next guest says the number one
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investment right now
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is eye bonds here to explain is a
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personal finance power player and our
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dear friend susie orman host of the
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women and money podcast she is also
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co-founder of the emergency savings firm
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secure save susie it is always great to
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see you welcome good to have you back
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with us let's talk about these eye bonds
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which i
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i didn't even know about but my
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nephew-in-law said you got to get these
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eye bonds explain to me what they are
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how they work how i buy them and from
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whom
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now so you buy them from the treasury
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directly from them so you go to
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treasurydirect.gov
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it is the only place that you can buy
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them number one
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they range in price from you can invest
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25
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all the way up to a maximum per person
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of 10 000
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although there are ways to do it where
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you can put in up to 30 000 if you have
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a trust and or a business
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when you invest in an i bond i stands
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for inflation
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you have got to make sure that for one
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year you do not need your money and the
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reason is from year from the time you
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put it in to one year you cannot touch
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it from year two to five there is only a
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three-month interest penalty that is how
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they work they are attached to cpi
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so right now when they announced in may
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the cpi
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the yield on the series i bonds were
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9.62
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guaranteed that's annualized that's
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guaranteed to you so they change every
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six months
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the interest rate changes every may and
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november so from may to november
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everybody who buys one right now
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will be guaranteed an annualized yield
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of 9.62
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state income tax free now obviously
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you're only going to get that for six
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months but that's still four point eight
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one percent on your money
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when they reset come november let's say
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they reset even lower let's say they
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reset at 7.11 which is what they were
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paying before they raised to 9.62
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you're guaranteed that for the next six
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months on an annualized yield so that's
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like
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six 3.56 half of that for six months
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because that's what you're guaranteed so
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for the year you would be getting eight
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point three seven percent
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that's essentially how they work they're
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fabulous
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their maturities are for yeah go on no
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no please please i don't i don't mean to
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interrupt you but i wanted to ask you
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are you those numbers that you just
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sighed and i get it you explained it
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perfectly they reset every six months
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are you guaranteed uh under this program
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to make a yield if you hold the bonds
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that is above the then prevailing rate
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of inflation
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so what happens is you are absolutely
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guaranteed and what's so great is that
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the only way a finance person can ever
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use the word guaranteed is usually with
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a treasury instrument because it's
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guaranteed by the authority of the
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united states government
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no commissions or anything so once they
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declare that rate on may 1st and
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november 1st you are guaranteed for
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whenever you buy it between those
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periods for six months you are
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guaranteed the right rate that they
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declared
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again remember that's an annualized
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yield so it's only really guaranteed for
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six months until they reset you know
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tyler i've gave a master class on this
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on the women and money podcast on the
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april 17th edition of it everybody
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should listen to it because it tells you
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all the ins and outs everything you need
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to know and this is an investment i've
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been doing these since 2001.
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so susie this does this this does make
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an awful lot of sense i
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you explained it very well certainly in
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your first answer and talking about the
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9.6
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rate is
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very we understand that that does clear
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the level of inflation but if inflation
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is something like 8.6
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aren't you more or less just sort of
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protecting the value of your money
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rather than really growing it if
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inflation is only about a percent less
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than what you're making
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courtney you got that right but don't
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you want in markets like this to have a
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percentage of your money absolutely
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protected where are you going to go you
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can't go to regular bonds because bonds
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if you have been in bond funds for
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growth and protect you're down 10 or 15
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you're down significantly in the stock
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market there is has got to be a portion
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of your money whatever that is
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that you want protected you want
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essentially in cash at least where it's
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keeping up with inflation which is
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exactly what this will do versus you're
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in a money market account or a cd or
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whatever it is and you're getting three
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percent
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where you're losing money so this is a
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great place to put your safe money the
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the bonds mature at what um
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after five years you mentioned between
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years two and five what is the
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you just keep rolling the money or what
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happens
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no so what happens is the bond is good
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for 30 years i see and what you and you
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can redeem them any time after the first
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year
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from the year two through five
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there is a three-month interest penalty
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after the fifth year you can redeem any
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um
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out any penalties whatsoever but really
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essentially all right so you're in there
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for a year so finally and you redeem
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after that big deal final question which
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which really courtney touched on and
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that is that this is for a portion of
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your money ideally money you don't need
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to touch
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um in some ways like stocks but but you
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you acknowledge that there is with this
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kind of safety money and opportunity
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cost which is to say
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it's not going to be your growth money
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the stock market might return you
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over the five years or the 10 years you
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hold this bond much more than
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eight percent nine percent a little
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above inflation right i mean your growth
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money is a different thing
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absolutely you have growth money you
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have emergency savings account money
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that would never go into something like
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this because you can't even afford to
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lock that up for a year but you do have
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a portion of your money
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that you want right now safe and sound
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because everybody's so free right
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and at these interest rates if inflation
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continues these are a big winner what's
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that podcast date again susie
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go back and look at it april 17
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yep the women in money podcast
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master class on it and i guarantee you
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you'll all end up buying them
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