You can buy an I bond from the federal government that is paying 5.64% for the next six months. Because of deflation, you can expect the six months after that to pay 0%. They say you have to hold for a minimum of 1 year before selling.

But you don’t!

If you buy on March 31, you can sell on March 1 of next year. You’ll earn about $27.81 in interest for that period on a $1000 bond – all of it in the first six months. When you sell, you’ll lose the most recent 3 months interest – or $0, $0, and $0. So for holding the bond for 335 days, you get the full $27.81….

That is equivalent to an 11 month, 1 day CD paying 3.03% APY. And unlike a CD, that interest is not taxable by your state government.

For me, I face a 5.451% state tax rate, so that I bond is equivalent to a taxable CD rate of around 3.2% That’s better than this 3.1% offer, and my money is only tied up for 11 months, not 24. Taking the 24 month term is only worth it if you think rates are going to go down from here. But can they really get much worse? When will the inevitable rampant inflation kick in?