Okay, so I mentioned the other day how I-Bonds purchased right now will earn over 3% for at least the next six months.

Dare I say it?

That sounds pretty good to me.

The last time I said that (back in April when the 6-month rate was over 5%), I threw a cool grand towards TreasuryDirect and, in hindsight, it was a move that I now feel was pretty wise…though opening a Roth IRA or buying some Ford stock at the time would have made me more money.

Hindsight is 20/20.

But for a totally safe no-risk investment — I did the right thing. My only mistake was not maxing out my yearly contribution back then.

The big downside with I-Bonds is that the money is “locked-up” for 12 months and you can only “buy” $5000 worth per year online. You also forfeit 3 months worth of interest if you redeem them with-in the first 5 years.

I’ve little doubt that I’ll cash out well before the 5-year mark but a 3-month interest penalty doesn’t really turn me off enough to turn another direction. A 12-month holding period isn’t unbearable either — especially when it’s not enough to tap out my savings account.

But on the subject of my savings account…

My ING Direct account currently has $15k in it. On it’s own, it earns a paltry 1.292% or around $16 per month.

Now, I still have the option of purchasing another $4000 worth of I-Bonds in 2009 (because I only bought $1000 worth back in April).

And $4000 at 3.36% (the current rate for the next 6 months) will earn me a little more than $11 per month for, again, at least 6 months.

Doesn’t take a rocket scientist to figure this one out…

      $4000 earning $11 vs. $15000 earning $16

If even for just six months, the I-Bond is more attractive than stashing money with ING.

If the rate gets better in six months, I’ll let it sit there. If it gets worse, I redeem them next November and take the 3-month interest penalty which certainly won’t amount to much since, in that case, the last three months will be earning substantially less than $11 per month.

I haven’t done anything just yet but I’m pretty certain that I’ll be moving some money around at the tail end of the month…

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