The Real Floor

Quick gut check before we get into it.

Last year, a dollar parked in a decent money market fund felt like it was working. It was paying four and change, inflation was running under three, and you were quietly getting a little richer every month while doing absolutely nothing. That was a nice deal. It's gone.

Here's where we sit this morning. The September CPI report came in at 3.7 percent year over year. Gas is up 34 percent from a year ago. Fuel oil, which tracks diesel, is up 74 percent. The Fed raised rates in September for the first time since 2023 and meets again Tuesday and Wednesday. Most money market funds are paying somewhere a bit under 4 percent.

Do the subtraction. Your "safe" cash is earning about zero after inflation. Before taxes. After taxes, it's going backwards.

That's the bad news. The good news is the U.S. Treasury is about to put something on the shelf that almost nobody under 50 pays attention to, and it's about to go on sale at its best price in years.

This week's System Drop is the Real Floor. It's a layer of your money that is guaranteed to beat inflation, backed by the federal government, and nearly impossible to mess up once it's set. You only have to build it once. But you do have to do one thing before Wednesday.

Quick vocabulary, because the whole system hangs on one word.

Your nominal return is the number on the statement. Your real return is what's left after inflation eats its share. If your account pays 4 percent and prices rise 3.7 percent, your real return is about 0.3 percent. That's the only number that tells you whether you can buy more stuff next year than you can today.

Most people manage their money by nominal numbers. Wealthy people and institutions manage by real numbers. Different yardstick, different decisions.

There are exactly two places an ordinary person can buy a guaranteed real return straight from the government:

I bonds. Savings bonds that pay a fixed rate plus an inflation rate that resets every six months.

TIPS. Treasury Inflation-Protected Securities, regular Treasury bonds whose principal rises with CPI, paying a fixed real yield on top.

Right now both of them are unusually attractive at the same time. That almost never happens.

I bonds get new rates twice a year, on May 1 and November 1. The rate has two pieces.

The inflation piece is pure math. It's based on CPI from April to September, and that data is already in. Prices rose 2.04 percent over those six months, so starting November 1 the inflation piece will be 4.08 percent annualized. That's up from 3.34 percent today.

The fixed piece is the one that matters long term, because whatever fixed rate you lock in stays with that bond for up to 30 years. It's 0.90 percent right now. David Enna at Tipswatch, who has called these resets correctly for years, expects it to rise to 1.30 percent and possibly 1.40 percent, based on where five-year TIPS yields have been trading.

Run the Treasury's formula with those numbers and I bonds bought from November through April would pay about 5.4 to 5.5 percent for the first six months. And every six months after that, you get inflation plus that fixed rate. Forever, or at least for 30 years.

For context, a 1.3 percent fixed rate would tie the best since 2007, and 1.4 would beat it. People who bought I bonds in 2021 and 2022, when everyone was excited about the 9.62 percent headline, got a fixed rate of zero. They got a sugar high. You're getting a floor.

So here's the first move, and it's the counterintuitive one:

Don't buy I bonds this week. If you buy before November 1, you lock in the 0.90 percent fixed rate permanently. Wait until November and you get the higher fixed rate plus the higher inflation piece. One week of patience is worth about four-tenths of a point a year, every year, for the life of the bond.

TreasuryDirect, the government site where you buy I bonds, is switching its login system. After October 28, the only way in is through ID.me. Your old username and password stop working.

If you already have a TreasuryDirect account, link it to ID.me this week, before the cutover, while the old login still works as a fallback. If you don't have an account yet, open it now so you're not standing in a digital line on November 1 with half the internet trying to verify their faces at the same time.

ID.me is a private company and it uses identity verification that some people find invasive. There are options to verify without automated facial recognition. I'm not going to tell you how to feel about it. I'm just telling you that it's the only door, and it's better to walk through it on a quiet Monday than on a crowded Sunday.

Three layers. Build them in order. Each one has a cap, a job, and a rule.

The job: guaranteed, inflation-protected money that you can reach after 12 months. This is the most flexible piece of the floor.

The cap: 10,000 dollars per person per calendar year, bought electronically. Paper I bonds through your tax refund were discontinued in 2025, so that old workaround is dead.

The rule: fill the household capacity, not just your own.

Most people stop at their own 10,000. Map every slot you actually have:

Now here's the timing trick most people miss. The November rate holds until April 30. So you can buy your 2026 allocation in November, then buy your 2027 allocation on January 2 at the exact same fixed rate. That's 20,000 dollars per person locked into the higher floor within about eight weeks. For a married couple, 40,000. Add a trust and that's 60,000.

Know the strings before you pull them. You can't touch an I bond for 12 months. If you cash out before five years, you lose the last three months of interest. Interest is taxed federally but not by your state, and you can defer the federal tax until you redeem. Those rules make I bonds a terrible checking account and an excellent second-tier emergency fund.

The swap question. If you already own I bonds with a 0 percent fixed rate from late 2020 through 2022, you might consider cashing some and buying new ones at the higher fixed rate. It's not automatic. You'll owe tax on the accrued interest in the year you redeem, and if the bond is under five years old you eat the three-month penalty. Enna ran a real example: a 10,000-dollar bond from January 2023 cashed in November nets about 11,488 dollars with the penalty, creating roughly 325 dollars of tax, while the new bond earns around 90 dollars a year more. That's a few years to break even. Worth it if you plan to hold for a decade. Not worth it if you'll need the money in two years. And it uses up your 10,000 annual limit either way, so it competes with new money.

The job: larger amounts of inflation-protected money with dates attached. A wedding in 2029. A down payment in 2031. The first five years of retirement spending.

The cap: none.

The rule: match each bond to a year you need the money, and hold it in a tax-advantaged account if you can.

TIPS are having a moment. The five-year TIPS auction last Thursday cleared at a real yield of 2.367 percent. The ten-year reopening in September hit 2.653 percent, the highest real yield on a ten-year TIPS in nearly 18 years. Translation: for the next decade you'd earn inflation plus about 2.65 percent, guaranteed by the Treasury.

I had to double-check that one. The average real return on stocks over long periods is somewhere around 6 or 7 percent, with gut-wrenching swings along the way. Right now you can lock in more than a third of that with no credit risk, and no drawdown that matters, as long as you hold to maturity.

You can buy TIPS at auction through TreasuryDirect or through any major brokerage, where you can also buy existing TIPS on the secondary market to fill specific years. A ladder is simply one TIPS maturing each year you need cash. When one matures, you spend it or roll it.

The one gotcha: in a taxable account, the inflation adjustment to your principal is taxed every year even though you don't receive it until maturity. People call it phantom income. That's why TIPS usually belong in an IRA or 401(k) where the annual adjustment isn't taxed. If your 401(k) has a TIPS fund, that's a different animal than individual bonds, because a fund never matures. Fine for exposure, not for matching a specific date.

This is the part nobody does, and it's why most people's inflation protection is a decision they made once in 2022 and never revisited.

I built mine in Make.com. Three scenarios.

The CPI day ping. The CPI report lands around the middle of each month. In April and October, that report finishes the six-month string that sets the next I bond inflation rate. On those two release days, Make pulls the number, does the math, and sends me one email: here's the new variable rate, here's whether to buy before or after the reset.

The reset day check. On May 1 and November 1, Make pulls the Treasury's rate page and logs the new fixed rate and composite rate into a Google Sheet next to my holdings. If the new fixed rate is meaningfully higher than what I own, it flags a swap review.

The auction calendar. TIPS auctions follow a published schedule. Make adds each auction to my calendar a week ahead, with the maturity year noted, so I can decide whether it fills a hole in my ladder.

Then once a year, I paste my TreasuryDirect holdings and brokerage TIPS positions into Galaxy.ai with a prompt like this:

"Here are my I bonds with purchase dates and fixed rates, and my TIPS with maturity dates and real yields. Calculate the current composite rate on each I bond, flag any with a fixed rate below 0.5 percent, show my total inflation-protected dollars maturing or available by year for the next ten years, and list any years with no coverage."

I run it through two models inside Galaxy and compare. The answers disagree more than you'd think on the I bond math, which is exactly why you check.

This is the question I get most, and the honest answer is: smaller than your fear wants, bigger than your ego wants.

Here's how I think about it.

Months 0 to 6 of expenses: high-yield savings or a money market. You need same-day access. Accept the near-zero real return. It's insurance, not an investment.

Months 6 to 18: I bonds. The 12-month lockup rules them out as your first line of defense. As a second line they're about perfect. They sit there, hold their value against prices, and wait for the day the furnace dies.

Known future spending with a date: TIPS ladder. Tuition in 2030, the roof you know is coming, the gap years before Social Security. If you can name the year, a TIPS can cover it.

Everything else: your long-term portfolio. The floor is not where wealth gets built. It's what lets you leave the wealth-building part alone when markets get ugly.

Honestly, that's the whole point. The real payoff on the floor isn't 5.4 percent. It's the next ugly market, when your stocks are down 25 percent and your neighbor is selling, and you just shrug because the next three years of bills are already sitting there, locked and growing with prices. I've watched that shrug save people more money than any yield ever did.

This week (by Wednesday): Link your TreasuryDirect account to ID.me, or open one. Map your household capacity: you, spouse, trust, business.

Wednesday, 2pm ET: The Fed announces. Ignore the noise for this purpose. Nothing the Fed chair says at the press conference changes the I bond math, because the inflation data that sets it already printed.

Sunday, November 1: Treasury announces the official fixed rate. If it's 1.3 or 1.4, proceed.

November: Buy your 2026 I bond allocation for each slot in the household. Buy in November, not the last days of December, so a bank transfer hiccup doesn't push you into January and cost you a year of capacity.

January 2: Buy your 2027 allocation at the same fixed rate.

Ongoing: Fill the TIPS ladder one year at a time, inside retirement accounts where possible.

For about 15 years, from 2008 into the early 2020s, cash was trash and inflation was quiet. A whole generation of investors learned that the only way to grow money was to take risk with it. That lesson worked until it didn't.

The Real Floor is the opposite lesson. It says some of your money's job isn't to grow fast. Its job is to never, ever lose ground. When that layer exists, every other decision you make gets calmer, because the worst case has a bottom.

Right now, the government is selling that bottom at the best real yields in almost 20 years. You don't need to be early. You just need to be set up by November.

Want the whole thing ready to run?

I built The Real Floor Kit so you can set this up in one sitting. It includes the household I bond capacity map (you, spouse, trust, business, and the November plus January double-buy calendar), the composite rate calculator, the swap-or-hold worksheet for old low-fixed-rate bonds, a TreasuryDirect and ID.me setup checklist, a TIPS ladder planner with the account placement rules, my Galaxy.ai holdings audit prompt, and the Make.com blueprints for the CPI day ping, the reset day check, and the auction calendar.

Reply to this email with the word FLOOR and I'll send it over.

About the room.

The Grid Inner Circle is where readers build these systems with me instead of bookmarking them for later. This week we're running a TreasuryDirect setup night, live on screen: getting through ID.me without the headache, opening entity accounts for trusts and businesses, and walking through a real TIPS purchase at a brokerage so the first one isn't scary.

Monthly is 29 dollars. The seat I'd point you to is lifetime at 499 dollars. Pay once, keep every future build session, template, and live call for as long as the Circle runs. That's the founding price, and it goes away when the founding seats are gone.

Reply with the word LIFETIME and I'll send you the details and the link.

See you Wednesday.

Alex Rivera, Wealth Architect at Wealth Grid

This is education, not financial or tax advice. I bond rates for November are projections until the Treasury announces them on November 1. Confirm details at TreasuryDirect before you buy.