Inflation-Linked Savings Bonds (I Bonds)

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DEFINITION

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.

INVESTOPEDIA EXPLAINS

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.


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