Everyone says right now is the time to invest in I bonds, but I have 3 reasons not to take

• Friends, family, and experts have told me now is the time to invest in I bonds.
• They’re a good choice because they’re stable, secure, and the rate is high right now.
• However, they’re limited, inflexible, and the variable rate concerns me.

A few months ago, a friend I often turn to for financial advice called me to tell me that I had to invest in something called I Bonds.

An I Bond is a bond issued by the US Treasury that pays you both a fixed rate and an inflation-adjusted rate. Currently, I Bonds are earning higher returns (9.2%) than some high-performing stocks and the risk is much lower, since it’s a government-backed bond. Plus, the return is much higher than other low-risk options, like a high-yield savings account or CD.

After my friend alerted me to take advantage of this locked-in interest rate of 9.2% that will be available until October 2022, when the interest rate changes (it changes twice a year), other people in my life gave me this same advice, from family members to financial advisors.

But the more I researched I Bonds, and looked at my own financial goals, the more I realized I didn’t want to go this route with my money. Here are the reasons I said no to investing in I Bonds even though all of my friends did.

1. There’s a limit to how much you can buy

One investment mistake I’ve felt I’ve been making over the years is investing a small amount of cash in too many different projects, stocks, or funds. I want to limit the amount of things I’m putting my money into and put larger amounts in each of those assets.

So when I found out that a person can only purchase up to $10,000 worth of I Bonds a year, plus another $5,000 with your tax refund, I just didn’t feel like it was worth it.

I found this maximum to be limiting. Since I don’t want to spread smaller increments of money out between multiple places, the fact that I couldn’t put more money in every year made me stop and think if this was worthwhile for my financial plan.

2. There’s a lack of flexibility

Just like with most bonds or CDs, the money you put in I Bonds must be held there for at least 12 months. After that, any I Bonds redeemed in less than 5 years are penalized with the the last three months of earned interest. The full term of an I Bond is 30 years, which makes this a good long-term investment that you can contribute to every year.

Because I already have a SEP IRA I’m contributing to every month as my main source of long-term financial support, adding I Bonds to my portfolio didn’t seem to make sense, especially because I didn’t want to worry about having to pay any penalties if I decide this isn’t the right move for me to make right now.

3. The rate varies based on inflation

Since the rate of an I Bond is based off a fixed and an inflation-adjusted rate, there’s no guarantee that the amount of your return stays as high as it is right now in the future. As the rate of inflation declines, so will the rate of I Bonds.

So while it did feel tempting to purchase I Bonds at the current high rate of 9.2%, next year, that rate could fall quite a bit and my money would be locked into the I Bond for the next five years (or I’d have to pay a penalty to withdraw it).

The variable rate made me ultimately decide to pass on putting money into I Bonds, even though so many other people I know decided to do it.