US Savings Bonds

Posts Tagged ‘ee series bonds’

A complete overview of EE Series Bonds, Part II

(c) Copyright 2006 by Harold Pennington 

The US Treasury has a great website called ‘TreasuryDirect’ where you can log on and purchase, manage, and redeem Electronic EE Series Bonds safely and securely. In addition, a new program they’ve recently launched called 

“SmartExchange” allows you to convert your Series E, EE and I paper Savings Bonds to electronic securities in a special conversion-linked account online! 

Even your existing paper bonds can take advantage of these online options. Since paper EE Series Bonds are still available through most local financial institutions or payroll deduction plans, this is an increasingly popular option. 

Differences in Paper v/s Online EE Series Bonds

Electronic EE Bonds are a little more ‘direct.’ They are made for convenience, so there is no risk of selling before the bond has matured. 

Electronic EE Series Bonds:

• Are sold at face value; i.e., you pay $50 for a $50 bond and it’s worth its full value when it’s available for redemption. (Which is relatively much quicker)
• Can be purchased in any amount of $25 or more, to the penny you want to pay.
• Has an upper limit of $30,000 that you can purchase in one calendar year.
• Is issued electronically to your designated account, instantly.
• Can be watched online daily.

Buying Paper EE Series Bonds is much more traditional. If you just want the great value of this type of bond, but are a traditional investor who doesn’t need at the technically enhanced advantages of the online treasury system, then paper might be the way to go. Also, you don’t have to put the full amount down for the Paper version, so it really acts like a bond half its’ size. 

Paper EE Series Bonds:

• Are sold at half their face value. You would pay $25 for a $50 bond, but it’s not worth its face value until it has matured. (which takes twice a long as with the e-bond)
• Can only be purchased in denominations of $50, $75, $100, $200, $500, $1,000, $5,000, and $10,000.
• Have the same $30,000 maximum purchase in one calendar year.
• Are issued as paper bond certificates.

Also, if you redeem any EE Series Bond in the first 5 years, you’ll forfeit the 3 most-recent months’ interest. If you redeem them after 5 years, you won’t be penalized.

A complete overview of EE Series Bonds, Part I

(c) Copyright 2006 by Harold Pennington

Here’s a really simple way to invest your “rainy day” or “cookie jar” stash into something that you can be proud of. EE Series Savings Bonds are the best of all possible investments for safety, convenience and achieving a competitive return, especially for beginning investors.

So why are EE Series bonds such a great investment? It has to do with their rare mix of qualities & features.

First of all, EE Series Savings Bonds are notoriously reliable, being backed by the federal government. The US Treasury guarantees that new issues of Series EE Bonds will double in value by 20 years from the issue date. Unless you’re worried about a threat of our democracy failing, your money is more safe invested here than anywhere else.

Also, since it’s basically a loan you’re making to Uncle Sam, there’s no market fluctuation on the interest rate. If you buy one for 8.5% today, upon maturity, you get 8.5% interest back, period. You can bank on it. (And many do.)

This all makes them ideal candidates for use towards financing your child’s education, supplemental retirement income for yourself, birthday and graduation gifts, and other future events where you’ll need some extra cash.

However, the most convenient feature of a Series EE Savings Bond is the Treasury’s web reporting interface.

I am not aware of any other government-backed security, or for that matter any other securities at all that will allow you to log onto a website and see the exact value of your investment that day.

It’s a great way for a child to learn about the value of their investment dollar. You may have to discourage them the first week to not spend so much time staring at the screen though, but over time they’ll gain an appreciation for, well, appreciation!

Even if you are using EE Series bonds for your own retirement plans, surely you’re aware that life is quirky at best and you may need to cash out with very little notice… This is therefore the only choice for checking on your balance when you need to make those snap decisions.