Savings Bonds are issued by the US Treasury Department. These are
not tradable anywhere in the market. The bonds are non-marketable securities.
For any buying and selling activity, you need to go to the agents authorized by
the government. These agents are called Issuing and Paying agents. The saving
bonds are registered securities. This means that they are registered and held
in the name of the person who owns them.
Generally, there are three series of interesting saving
bonds. They are I Series, E/EE series and H/ HH bonds.
Series EE Bonds: They replaced the Series E bonds. You can
easily buy the EE bonds at a discount of half their face value. They come in
denominations of $50 to $10,000. There is however a limit. There is a ceiling
of $30,000 (on the face value) during any calendar year. These bonds increase
in value as the interest accrues/accumulates. They will generate for you
interest for 30 years. When EE bonds "mature," or are due for
maturity, you get your original investment back plus all of the interest also.
They are the accrual type of marketable securities.
Series HH Bonds: They are available for purchase only in
exchange for Series EE or E bonds and Savings Notes. The other way is to
procure the proceeds from a matured Series HH bond. They are quite different
from the usual EE bonds. Series HH bonds are purchased at their face value and
are available in $500 to $10,000 denominations. But there is no upper limit on
the amount you can invest. These bonds don’t increase in value and have a maturity
period of 20 years.
Series I Bonds: These bonds are available at face value
only. They grow with inflation-indexed earnings for a maximum period of 30 years.
You can buy Series I bond is $50 to $10,000 denominations, the limit being
$30,000 in any calendar year.
Bonds and Series EE Savings Bonds are of a similar type as
they are accrual securities. They will give you some earning, that is, accrue
interest monthly at a variable rate and the interest is compounded semi-annually.
You receive your earnings when you redeem an I Bond or Series EE Savings Bond.
Series HH Savings Bonds are current income securities. You
receive your earnings semi-annually and you receive the face value of Series HH
Savings Bonds when you redeem them.
The benefits of parking some savings in these saving bonds
is two way: first, you get a cut in the taxes thereby some tax benefits are
there. The other benefit is that they are more secure than other securities as
their value almost always rises. It never fluctuates much so the usual ups and
downs that other securities see, is not a regular feature in this bond.
Another great thing is that they are registered securities
so in case you lose these bonds (paper bonds etc), all you have to do is get in
touch with the authorities and you will get a replacement soon. Thus, there is
no issue of their being lost, destroyed etc.
The bonds are very affordable as you can start purchasing
them with as less as USD 25. The bonds are available right from the denomination of
USD 50 to USD 10,000. So, all you have to do is to analyse your needs,
financial goals and then purchase them.
In case you are tied up, no need to fret, these bonds are
valuable online also. So, all you have to do is a few clicks on the site and you
have bought them electronically, without moving anywhere from the comfort of
your chair. There more than 40,000 financial institutions that sell these
bonds.
You can sell them anytime you wish to, once the initial
holding period of 12 months is over.
Savings Bonds are safe and secure securities to park savings
for good returns. They are easy to buy and come in small as well as large
denomination also.
Disclaimer:
This article is presented solely as an example and is not meant to replace qualified
financial advice. If you or someone you know require up to date financial or
legal help please seek qualified assistance. No content on this site should
ever be used as a substitute for direct legal advice from your lawyer or a
qualified attorney.
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