The Ins, Outs, and All-Arounds of US Savings Bonds

Although they wax and wane in popularity over the years, bonds remain a core portfolio component for many investors.

The returns on savings bonds don’t always measure up to those of riskier securities, but they offer far more than their cash return alone.

In particular, US savings bonds are among the most stable and reliable investment vehicles in their class. Moreover, since they are backed by the full faith and credit of the US government, the only risk to your savings bonds is if the federal government were to become completely insolvent.

Investing in Savings Bond

For several reasons, many investors prefer to keep a portion of their portfolios in bonds. Bonds facilitate cash flow into a portfolio as an investment that primarily offers income instead of growth. Bond owners can then leverage this income in various ways, such as:

Advantages of Savings Bonds

– Reinvesting into more bonds and growing their passive income – Funneling into their long-term growth investment – Supplementing their regular employment income to pay bills, save, etc. – Any combination of the above

The overall return potential of bonds is typically lower than more aggressive investments like stocks. However, the stability and income advantages of bonds make them a popular counterpart to growth investments.

Some people still own paper EE bonds issued before 2012, which are still valid. However, since that year, the treasury has no longer issued new paper EE bonds. All new EE bonds are now electronic through TreasuryDirect.

Series EE Savings Bonds

The treasury calculates a new rate for series I bonds semiannually, in November and May. The result is a combination of a fixed base interest rate and one that is based on inflation. So over a 30-year term, an I bond’s interest rate could change up to 60 times.

Series I Savings Bonds

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