The downside of Series I Bonds
These are US Treasury bonds that change with inflation.
1. You are really locking your money away for a few years
There is a penalty if you withdraw from I bonds early.
2. You do not control the inflation rate
The government sets the rate. You may think the actual rate is higher or lower, but your opinion does not matter. Their opinion matters.
3. $10,000 max
You are only allowed to invest $10,000 in these bonds. Which means if you want to invest more than that you need to invest somewhere else.
4. You can only buy them from Treasury Direct
It is not the easiest site to use.
You cannot purchase them through a brokerage.
5. The fixed rate is extremely low
The higher interest rate, which is determined by inflation is what fluctuates.
6. They are great in times of high inflation, but not during low inflation
Historically the US has had low inflation, which means I bonds don't make a lot of money.