Inflation-Linked Savings Bonds (I Bonds)


DEFINITION of 'Inflation-Linked Savings Bonds (I Bonds)'

U.S. government-issued debt securities similar to regular savings bonds, except they offer an investor inflationary protection, as their yields are tied to the inflation rate.

BREAKING DOWN 'Inflation-Linked Savings Bonds (I Bonds)'

Available directly from the U.S. Treasury, these debt securities are an exceptionally low-risk investment suitable for the most risk-averse investor; they have virtually zero default risk and inflationary risk.

While relatively risk-free assets such as these usually offer some of the lowest rates of return, it is important to note that I Bonds are usually exempt from income tax. They therefore provide a more attractive after-tax return.

  1. Bond

    A debt investment in which an investor loans money to an entity ...
  2. Government Bond

    A debt security issued by a government to support government ...
  3. Inflationary Risk

    The uncertainty over the future real value (after inflation) ...
  4. Yield

    The income return on an investment. This refers to the interest ...
  5. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise ...
  6. U.S. Treasury

    Created in 1798, the United States Department of the Treasury ...
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