By Anna Prior
Question: How safe are Series I savings bonds? Can things like the recent debt-ceiling crisis affect them?
– Janice Shabra, Green Valley, Ariz.
Answer: That’s not unreasonable to wonder, given how the rancorous debt-ceiling negotiations in Washington had even veteran investors and analysts on edge. But experts say U.S. savings bonds (whatever series you may have) continue to be one of the safest investments out there—backed, as the Treasury Department puts it, “by the full faith and credit of the U.S. government.” Indeed, says Marilyn Cohen, president of bond-management firm Envision Capital Management in Los Angeles, holders of savings bonds are probably on equal footing with holders of Treasurys, still seen as a safe-haven investment. The biggest concern with I bonds: The interest rate—governed by a twice-yearly inflation adjustment—will be zero percent in periods of deflation, which if sustained, could mean little to no return.