5 High Yield Alternatives to Series I Bonds in 2024 | Summary and Q&A

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March 27, 2024
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Let's Talk Money! with Joseph Hogue, CFA
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5 High Yield Alternatives to Series I Bonds in 2024

TL;DR

Series I Bonds interest rate will decrease significantly in April, prompting the need for alternative investment options with higher yields.

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Key Insights

  • โ˜ ๏ธ Series I Bonds offer attractive interest rates but will experience a significant decrease in April due to inflation changes.
  • ๐Ÿ˜˜ Alternative investment options, such as gold, dividend stocks, worthy bonds, low beta stocks, and selling deep-in-the-money calls on stocks, provide higher yields compared to Series I Bonds.
  • ๐Ÿงก Each alternative option has its own advantages and potential returns, offering investors a diverse range of choices.
  • ๐Ÿ… Investing in gold and gold mining stocks acts as a hedge against inflation and provides dividend cash flow.
  • โ†ฉ๏ธ Dividend stocks with discounted prices and stable returns are worth considering for safer returns.
  • โœ‹ Worthy bonds offer a fixed income platform with high yields and the flexibility to withdraw funds without penalties.
  • ๐Ÿ˜˜ Low beta stocks provide stability and safety with potential returns, suitable for risk-averse investors.

Transcript

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Questions & Answers

Q: Why will the interest rate on Series I Bonds decrease after April 10th?

The interest rate on Series I Bonds is tied to the Consumer Price Index, and with a decrease in inflation, the interest rate on the bonds will also decline.

Q: What are some alternative investment options with higher yields?

Some alternative options include investing in gold, dividend stocks, worthy bonds, low beta stocks, and selling deep-in-the-money calls on stocks.

Q: How does investing in gold provide a high yield?

Gold has yielded an average of 8% annually over the past 24 years and serves as a hedge against inflation. One can invest in gold mining stocks or the SPDR Gold Shares ETF (GLD) to benefit from the price of gold and potential dividends.

Q: How does selling deep-in-the-money calls on stocks provide a high yield?

By selling call options on stocks at a strike price significantly lower than the current price, investors can lock in a discounted price for the shares and collect a premium. Even if the stock falls, investors still benefit from the discounted price.

Summary & Key Takeaways

  • The interest rate on Series I Bonds will decrease after April 10th based on the Consumer Price Index, making them less attractive for investors.

  • Five alternative investment options with higher yields and safety are highlighted, including gold, dividend stocks, worthy bonds, low beta stocks, and selling deep-in-the-money calls on stocks.

  • Each alternative is explained in detail, including its potential returns and benefits compared to Series I Bonds.

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