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NorthAvenue: I Bonds & ADV Delivery

I Bonds: Worth Considering

Throughout the pandemic, inflation rates have skyrocketed to rates not seen in decades. This sharp increase has caused many retirees without a comprehensive financial planner that has built inflation into their plan to worry about the sustainability of their retirement. This concern has caused a rising interest in I Bonds: US Treasury bonds with a variable interest rate tied to the current inflation rate. The current rate of these bonds is 7.12% (for the period of November 2021 to April 2022) and is expected to increase in May to 9.62%. This rate on a nearly risk-free investment almost seems too good to be true. While these can be excellent investments, some caveats limit their usefulness as a financial planning tool.

  • Each person can only invest $10,000 per year plus up to $5,000 of their tax refund.

  • You can't cash in the bonds for at least 12 months, and if you cash them in before five years have passed, you will pay a penalty of three months of interest. This means they are usually only a good fit for people in or near retirement who have plenty of cash for the next few years.

  • The rates may look great now, but the guaranteed amount is currently 0%, meaning that if inflation rates fall, which many experts expect they will, you may soon end up with bonds paying a lower rate than FDIC-insured high-yield savings accounts. This is not a huge issue; the May rate will be locked in for 6 months, so even if it falls to 0% at that time, you still have a pretty great return by the end of the 12-month holding time.

  • They must be purchased at TreasuryDirect.Gov and cannot be moved after purchase. Lost savings bonds are common, so you will want to very clearly note somewhere that you own the bonds and keep records of the serial number, issue date, and face value.

Form ADV Annual Update

With the end of April comes our requirement to deliver our annual ADV Part 2A & 2B brochures to you. They provide information about the qualifications and business practices of NorthAvenue LLC, as well as our Registered Investment Advisor Representatives. Please find our annual update at this link. If you have questions, we encourage you to reach out to a member of our team.

This year you will be receiving another delivery requirement of these compliance documents from us in the near future. In general, investment advisors with $100 million or greater in regulatory assets under management, must register with the SEC (Securities and Exchange Commission) as a Registered Investment Advisor. This threshold was met shortly after our last annual ADV Part 2A & 2B delivery requirement in early 2021, and with this current delivery requirement, we will be registering with the SEC.

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