Looking for a safe place to invest your money? With the volatility of the stock market these days, finding safe investments is more difficult. According to Investopedia, U.S. savings bonds are one of the safest types of investments because the federal government guarantees them.
As with all things money related, some research and basic education is needed before making the decision to invest.
History of Savings Bonds
U.S. Savings bonds have been available for purchase since 1776 when private citizens purchased over $27 million in government bonds to help finance the Revolution. Persons buying the bonds during that time were really buying at a risk because they were not sure they would get the bonds repaid.
Nonetheless, the new government did repay all of its savings bonds obligations. Since then, generations of families have taken advantage of the opportunity to invest in national projects such as the purchase of the Louisiana Territory, the building of the Panama Canal, the purchase of the state of Alaska and the completion of the transcontinental railroad.
U.S. Savings bonds have also helped to finance our country’s wars.
Types of U.S. Savings Bonds
One of the many benefits of investing in U.S. Savings Bonds is that they are not subject to state or local income taxes. Plus, the bonds are virtually risk free. Bonds do earn a lower interest than the stock market but investing in bonds is much less volatile.
There are two types of current bonds in which to invest:
1. Electronic EE Bonds (purchased online)
2. I Bonds (can be purchased as paper bonds at local financial institute or electronically)
The lists below compare the two types in more depth.
Electronic EE and Savings Bonds
- Sold at face value (if you buy a $25 bond, it is worth its full value at time of redemption).
- Can be purchased in amounts of $25 or more with a $5,000 maximum purchase in
- one calendar year.
- Issued electronically to your designated account.
Paper EE Savings Bonds
- Sold at half their face value (you buy a $25 bond now and it is not worth $50 until it is fully matured).
- Can be purchased in denominations of $50, $75, $100, $200, $500, $1,000, $5,000 and $10,000 amounts.
- Issued as paper bond certificates.
Electronic I Savings Bonds (once sold only as paper bonds but are now available in electronic form)
- Sold at face value (if you buy $25 bond, it is worth its full value at time of redemption).
- Can be purchased in amounts of $25 or more with a $5,000 maximum purchase in one calendar year.
- Issued electronically to your designated account.
Paper I Savings Bonds
- Sold at their face value, you pay $50 for a $50 bond.
- Can be purchased in denominations of $50, $75, $100, $200, $500, $1,000, and $5,000 amounts.
- There is a $5,000 maximum purchase in one calendar year.
- Issued as paper bond certificates.
If you redeem EE or I Bonds within the first five years, you’ll forfeit the three most recent months' interest. Redeeming after five years, you receive all of the interest.
Where to Buy or Invest U.S. Savings Bonds
The Bureau of Public Debt, a department within the United States Treasury Department. is the best place to start doing more thorough research and you can purchase bonds at their web site at www.publicdebt.treas.gov.
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