U.S. Savings Bonds

by By Ted Williams—NOCCC , TedWilliams@alum.mit.edu - June 18, 2001 at 20:29:11:

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The Internet is filled with dubious investment schemes. One simple way to invest in a safe and secure way is through the purchase of U.S. Savings Bonds. The yield is usually not as good as with many other investment options, but U.S. Savings Bonds are safe and the costs are minimal.

If you have a question about a Savings Bond that you already own or if you are interested in finding out more about U.S. Savings Bonds, the web site www.savingsbonds.gov provides comprehensive information on Savings Bonds..

You may choose between EE Bonds, I Bonds and HH Bonds. The following table compares some of the features of each. For more information, be sure to browse the above web site.

The US Government provides for regular, automatic purchase plans at no additional cost to you. Warning—interest does not accrue after the 30th year (20 yrs for HH). Be sure to redeem your bonds before they mature.

You can purchase or redeem U.S. Savings Bonds at most financial institutions or directly from the U.S. Treasury Department. You can redeem Savings Bonds at any time (subject to the penalties shown in the table below).

As an alternative, be sure to consider the purchase of Treasuries. For more information, go to www.treasurydirect.gov.

U. S. Savings Bond Features

Feature E/EE I H/HH

Purchase price 50% of face value Sold at face value Sold at face value

Face values $50 - $10,000 $50 - $10,000 $500 - $10,000

Maximum purchase $15,000/yr $30,000/yr no limit

 Interest paid 90% of average Fixed rate + Fixed rate

5yr treasury note Inflation

Current rate 4.5% 3% + 1.42% 4%

Penalty Penalty if held Penalty if held Must hold for 6 months.

< 5 years < 5 yrs

Fed Taxes Interest subject Interest subject Interest subject to to Fed tax

Fed tax at to Fed tax at on year earned but tax may

redemption redemption be deferred until redemption.

State and Local Tax none none none

How is interest Increase in Increase in Direct deposit to

your account

Paid? redemption value redemption value every 6 months.

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