Series I Bonds: What Australians Need to Know in 2025

With inflation making headlines and central banks tightening policies, investors worldwide are searching for low-risk ways to protect their cash. Enter Series I Bonds: a US government-backed product designed to outpace inflation while safeguarding capital. Although these bonds are not directly available to Australians, understanding how they work—and how their benefits compare to Australian options—could help you make smarter decisions about your own portfolio in 2025.

What Are Series I Bonds?

Series I Bonds are savings bonds issued by the US Department of the Treasury. Their unique appeal lies in their dual interest structure: a fixed rate plus a variable rate adjusted every six months based on US inflation data. This means the yield on these bonds rises when inflation surges, providing a rare form of built-in protection for savers.

• Low risk: Backed by the full faith and credit of the US government
• Inflation-adjusted returns: Interest rates reset twice a year to keep pace with inflation
• Tax benefits: Interest is exempt from US state and local taxes
• Purchase limits: US$10,000 per person per year (plus up to US$5,000 using tax refunds)

As of June 2025, the composite rate for newly issued I Bonds sits at 4.62%, reflecting the recent cooling of US inflation but still outpacing many term deposit rates globally.

Why Are Series I Bonds So Popular in 2025?

The global surge in inflation from 2021 through 2023 saw I Bonds become a sensation among US savers, with record inflows. In 2025, as inflation stabilises but remains a concern, their popularity persists thanks to several factors:

• Safety: No risk of capital loss
• Liquidity: Can be cashed after 12 months (though redeeming before five years forfeits the last three months’ interest)
• Inflation hedge: The variable rate component closely tracks the official Consumer Price Index (CPI)

For Americans, I Bonds are a straightforward way to keep cash reserves working harder without exposure to sharemarket volatility.

Can Australians Invest in Series I Bonds?

Currently, I Bonds are only available to US citizens, residents, and select overseas US citizens. Australian investors can’t buy them directly, but the concept offers valuable lessons:

• Inflation-linked investments: Look for Australian equivalents, such as Treasury Indexed Bonds or certain exchange-traded funds (ETFs) that track inflation-protected assets.
• Deposit options: Some banks are now offering term deposits with inflation-linked features, reflecting growing demand for inflation protection.
• Diversification: Incorporating inflation-sensitive assets—like real assets or commodities—can help protect your portfolio’s purchasing power.

In Australia, Treasury Indexed Bonds (TIBs) are the closest equivalent. These are government-issued bonds whose principal and interest payments rise with the CPI. However, TIBs have a higher minimum investment and are traded on the ASX, so they may not suit all savers.

How Do Series I Bonds Stack Up Against Australian Options?

For everyday Australians, the big question is: how do Series I Bonds compare to local options in 2025?

While Series I Bonds offer a compelling package for US investors, most Australians will need to consider TIBs or alternative inflation-hedging strategies if they want similar protection.

Key Takeaways for Savvy Aussie Investors

• Series I Bonds highlight the value of inflation-linked, low-risk investing—especially during periods of economic uncertainty.
• While not directly available in Australia, their structure and popularity have sparked renewed interest in local inflation-protected bonds and funds.
• Australian savers should compare the risk, return, and access features of TIBs, term deposits, and high-interest savings, especially as the RBA’s 2025 policy settings continue to shift.