Inflation-Linked Savings Bonds (I Bonds)

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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.

INVESTOPEDIA EXPLAINS '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.

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RELATED FAQS
  1. What are "I Bonds" and how can I buy them?

    The term "I Bond" is industry lingo for inflation-linked savings bonds issued by the U.S. Treasury. You've probably heard ... Read Full Answer >>
  2. What is the relationship between the current yield and risk?

    The general relationship between current yield and risk is that they increase in correlation to one another. A higher current ... Read Full Answer >>
  3. What is a 'busted' convertible bond?

    In finance, a convertible bond represents a hybrid security that offers debt and equity features and risks. While a convertible ... Read Full Answer >>
  4. Who or what is backing municipal bonds?

    Municipal bonds are backed by dedicated taxes or revenue sources related to specific projects, or by the full faith and credit ... Read Full Answer >>
  5. What are the differences between debt and equity markets?

    The basic differences between the debt and equity markets include the type of financial interest they represent, the way ... Read Full Answer >>
  6. What does it signify if the term structure of an interest rate's curve is positive?

    When the term structure of interest rates is positive, it is a signal to economists the short-term yields on similar bonds ... Read Full Answer >>
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