Big yields on I bonds

Q

Are I bonds decent investments? — H.R., Binghamton, New York

AThey're worth considering, and they're particularly attractive now because the interest rates paid by I bonds are tied to inflation.

The rates have two components: a fixed rate that lasts for 30 years and an inflation rate that changes every May 1 and Nov. 1. The fixed rate is currently only 0.40%, but with inflation so high lately, the total interest rate is 6.89%, which applies during the first six months you own the bond and then changes with inflation thereafter.

I bonds can defend your investment against inflation. When inflation is high, they can pay more than many other alternatives, such as certificates of deposit (CDs).

Q

I heard that when you buy stocks, you have to buy at least 100 shares. True?

— G.A., Norfolk, Virginia

ANope. You can buy as little as a single share of a stock — and possibly less. Back when many brokerages charged $25 or more per trade, it wouldn't have been wise to pay $25 to buy, say, a $40 stock. Lots of major brokerages are charging $0 per trade these days, though, so it's easy to buy small numbers of shares.

Meanwhile, if you've been able to direct your brokerage to reinvest your dividends into additional shares of stock (many will do so), you'll often be receiving fractions of shares. A $5 dividend, for example, will get you 0.33 shares of a $15 stock.

Keep in mind that you may need to be able to account for the shares you buy or receive, knowing your cost basis in order to calculate taxable gains (or losses). If you're buying and selling in a retirement account, you generally won't need your cost basis.