The U.S. economy grew at a nearly 3% annual rate between June and September, ending a six-month decline and keeping alive the hope of avoiding a recession.
While many people are still struggling with COVID-era setbacks, others are prospering, says Michelle Singletary, personal finance columnist for the Washington Post.
She emphasizes that if you have money lying around, you can buy inflation-protected I bonds, which are paying at 9.62%.
She explains, “The idea from these was that your money will keep pace with inflation. So since inflation is at a 40-year high, I bonds had been paying since May that 9.62%. … By Friday, that you've got to buy them so that they can process before the end of October, because the rates reset in November.”
People must hold I bonds for at least one year, then they can cash them in. But if you cash them in before five years, you must forfeit the last three months of interest, she notes.
She adds, “This is money that you’ve got to keep parked for a while. … You could … pocket [it] for college money. I also think you should do a 529 plan for college money, but it's a good place, especially if the rate still stays pretty high.”
How else can you stave off the inflation that’s attacking your savings? Look at your budget, cut down on dining out and certain expensive groceries, she advises.
There’s also good news for people with 401k retirement plans. Singletary explains that in 2023, you can contribute $2,000 more, which means a maximum of $22,500. And if you’re age 50 or up, you can put in $7500 more, which means a max of $30,000.