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Savings Bonds Value - Determining a Savings Bond's Value

safety tax benefits great interest rates ease and flexibility of purchase two kinds of savings bonds

When financial experts talk about investments, the phrase “stocks and bonds,” gets tossed around a fair bit. Most investors focus on the stocks half of that phrase. For the well-rounded investor, however, it is important to add the surety of bonds to a financial portfolio. One of the more overlooked forms of bond is the savings bond. Most people think that savings bonds are just for kids. This is a fallacy. Taking a closer look at a savings bond’s value will leave a very favorable impression in the savvy investor’s mind. Read on for a closer look at all the positive aspects that savings bonds have to offer your investment portfolio.

Safety

Savings bonds are backed by the United States Treasury Department. This makes them one of the safest investments around. They are also overseen by the Bureau of Public Dept, which makes them even safer. This security is one of the principal reasons that a savings bond is such a great value. When you invest in a savings bond, you can be sure that your money is coming back to you.

Tax Benefits

Another benefit of savings bonds’ association with the United States government is the tax exemption factor. All of the interest on savings bonds is completely exempt from local and state income taxes. Federal taxes are not levied on savings bonds until they reach maturity. These benefits are attractive for all investors, particularly those investors who find themselves in higher tax brackets. For those who use a savings bond for educational expenses, the savings bond will be exempt from federal tax as well as state and local.

Great Interest Rates

As well as being extremely secure and taxpayer friendly, a savings bond’s value can be assessed by looking at its interest rate. When you purchase a savings bond, you receive a detailed timetable of the interest rate payments broken down on a monthly basis. This is a feature that you cannot find with any other investment. At most, other bonds will provide a quarterly interest rate. The more frequent interest rate of a savings bond gives it a much greater value than other investments. Because the interest is rolled back into the principal, it becomes more valuable with more frequent calculation.

Ease and Flexibility of Purchase

Savings bonds are one of the most convenient investment options on the market. They can be purchased in eight different denominations. A savings bond’s value can be as low as $50, and a high end savings bond can be found in a denomination of $10,000. This variety of levels insures that a savings bond can be purchased by any level of investor. From the investment banker to the kid with a paper route, any investor will be able to enjoy the security of a savings bond.

As well as the variety offered by a savings bond, the ease of purchase is a benefit as well. You can purchase saving bonds at any bank in the United States. For even more convenience, an investor can buy a savings bond online by visiting the Bureau of Public Dept’s home on the web, http://www.publicdebt.trneas.gov/. When it is time to redeem a savings bond, the convenience doesn’t stop. Simply go into any bank in the country, present your identification, and redeem the savings bond for cash.

Two Kinds of Savings Bonds

Now that you know the value of savings bonds, it is time to learn about the two types that are available for purchase. The first is known as the Series I, and the second is called the Series EE.

Series I savings bonds are adjusted for inflation, according to the Consumer Price Index. This adjustment is done on a semi-annual basis. This is a very powerful incentive for investors. The Series I savings bond will come to maturity after a period of 30 years.

Series EE savings bonds are accrual based. This means they are purchased at less than face value, and then reach face value over time. Series EE bonds are purchased for half of their face value, and they are guaranteed to reach face value after 17 years. Like the Series I bonds, the Series EE savings bond will reach its full maturity after a period of 30 years.

Savings For Children - Best Savings Options for Children [next] [back] Savings Account Bank - Why A Savings Account Bank Is Your Best Investment At This Point In Time

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