Inflation-fighting alternatives to I bonds

Finding an I-bond alternative isn't easy
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Inflation is a scary thing for investors who depend on their investments for living expenses every month. Unfortunately, a key inflation-fighting tool, the I bond, hasn't had much fight in it lately.

In November, the Treasury set the fixed rate for I bonds at zero percent, with a paltry variable rate of 0.74 percent to account for the miniscule growth of the Consumer Price Index.

The fixed rate will apply to all I bonds issued between November and May, and it will stick with the bond throughout its 30-year life span. In May, a new fixed rate will be announced.

The variable rate component changes every six months. A new variable rate is announced in May and November based on inflation changes and is applied to all outstanding I bonds.

"The yields are now just so low," says Stan Richelson, co-author of "Bonds: The Unbeaten Path to Secure Investment Growth." "They're not encouraging people to buy savings bonds."

Even so, finding a higher-performing alternative that has the benefits of an I bond isn't easy, as investors look for security, portfolio diversification, a steady yield and inflation-fighting power.

Here's a look at some I-bond alternatives and how they stack up.




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