Unlike the other types of Treasury securities, savings bonds can be owned by kids. Also, savings bonds are non-marketable, which means they are registered to a specific owner and cannot be bought and sold to other people in the "secondary market" by brokers and dealers. Paper savings bonds used to be bought in different denominations. Bonds were available with a face value of $25, $50, $75, $100, $200, $500, $1000, $5000 and $10,000. You could buy them from most commercial banks in paper form or directly from the Treasury Department in electronic form. Savings bonds that are electronic can be bought for as little as $25 or any amount up to $5000 and held in a secure TreasuryDirect® account.
Since January 1, 2012, paper savings bonds are no longer available at banks or other financial institutions. Paper Series I bonds can still be bought with IRS tax refunds, but Series EE bonds are available only in electronic form.
There are two types of savings bonds currently available.
- Series EE bonds
- will pay a fixed (or set) interest rate
- are available as electronic bonds
- earn interest each month
- are guaranteed to at least double in value in 20 years
- earn interest for 30 years
When you used to buy a paper Series EE bond, you paid half the face value for the bond. Now, you pay the total face value for electronic EE bonds. At the end of the savings bond's term, you cash it in. Regardless if you paid half or total face value, you will get the face value plus the interest that has built up over the years. You can cash in your bond after one year from buying it and get back the money you paid for it. You will not get all the interest that has built up if you cash in a savings bond before it is five years old.
- Series I bonds
- Paper (through IRS tax refunds) and electronic bonds are sold at face value
- can be cashed in after one year from buying it for the amount you paid for it (but you won’t get all the interest that has built up if you cash in a Series I bond before it is five years old)
- earn interest for 30 years
The Series I bond has two interest rates. One is a fixed rate that is set when you buy your bond. The other rate is connected to the inflation rate (a rise in the prices you pay for the things you buy). If there is inflation, the interest rate goes up. If prices are falling, called “deflation,” the interest rate goes down.
FAQs
How to get the most value from your savings bonds
| Face Value | Purchase Amount | 30-Year Value (Purchased May 1990) |
|---|
| $50 Bond | $100 | $207.36 |
| $100 Bond | $200 | $414.72 |
| $500 Bond | $400 | $1,036.80 |
| $1,000 Bond | $800 | $2,073.60 |
Bonds can be a good way to help kids save for future expenses. They are guaranteed not to lose value and are intended to keep pace with inflation. Money from I bonds can come in handy as kids enter adulthood and look to make major purchases.
What are the disadvantages of TreasuryDirect? ›
Securities purchased through TreasuryDirect cannot be sold in the secondary market before they mature. This lack of liquidity could be a disadvantage for investors who may need to access their investment capital before the securities' maturity.
Is TreasuryDirect.gov legit? ›
TreasuryDirect.gov is the one and only place to electronically buy and redeem U.S. Savings Bonds. We also offer electronic sales and auctions of other U.S.-backed investments to the general public, financial professionals, and state and local governments.
Do savings bonds double every 7 years? ›
Series EE savings bonds are a low-risk way to save money. They earn interest regularly for 30 years (or until you cash them if you do that before 30 years). For EE bonds you buy now, we guarantee that the bond will double in value in 20 years, even if we have to add money at 20 years to make that happen.
How long does it take for a $1 000 dollar savings bond to mature? ›
They're available to be cashed in after a single year, though there's a penalty for cashing them in within the first five years. Otherwise, you can keep savings bonds until they fully mature, which is generally 30 years.
What is the downside to buying Treasury bonds? ›
These are U.S. government bonds that offer a unique combination of safety and steady income. But while they are lauded for their security and reliability, potential drawbacks such as interest rate risk, low returns and inflation risk must be carefully considered.
What is the best bond to buy for a child? ›
I bonds can be good investments for parents or grandparents who are looking to save money for their children and grandchildren. First, I bonds can be a steadier and more predictable investment than the stock market — it's redemption value will not decline because it is backed by the U.S. government.
Do kids have to pay taxes on savings bond interest? ›
Reporting the interest every year
For example, you may find it advantageous to report interest every year on savings bonds in a child's name. The child may be paying taxes at a lower rate than will be true years later when the bond matures.
Is it better to buy treasuries from broker or TreasuryDirect? ›
There are several ways to buy Treasuries. For many people, TreasuryDirect is a good option; however, retirement savers and investors who already have brokerage accounts are often better off buying bonds on the secondary market or with exchange-traded funds (ETFs).
Treasury securities are considered a safe and secure investment option because the full faith and credit of the U.S. government guarantees that interest and principal payments will be paid on time.
How risky are Treasury securities? ›
They offer a fixed interest rate and are backed by the U.S. government, making them a low-risk investment. While they may not yield the highest returns compared to riskier investments, they can provide stability to your portfolio, particularly during times of market volatility.
Does TreasuryDirect charge fees? ›
TreasuryDirect is a web application from the U.S. Department of the Treasury. TreasuryDirect is free. There are no fees, no matter how much or how little you invest. You may hold both savings bonds and Treasury marketable securities in TreasuryDirect.
How long does it take to get money from TreasuryDirect? ›
You just bought a security from the U.S. Treasury. Securities are generally issued to your account within two business days of the purchase date for savings bonds or within one week of the auction date for Bills, Notes, Bonds, FRNs, and TIPS.
What happens when a treasury bill matures on TreasuryDirect? ›
When the bill matures, you are paid its face value. You can hold a bill until it matures or sell it before it matures. Note about Cash Management Bills: We also sell Cash Management Bills (CMBs) at various times and for variable terms. Cash Management Bills are only available through a bank, broker, or dealer.
What is the final maturity of a $100 savings bond? ›
U.S. Savings Bonds mature after 20 or 30 years, depending on the type of bond: Series EE bonds mature after 20 years. They are sold at half their face value and are worth their full value at maturity. Series I bonds are sold at face value and mature after 30 years.
What is the average bond return for 30 years? ›
30 Year Treasury Rate is at 4.55%, compared to 4.55% the previous market day and 3.96% last year. This is lower than the long term average of 4.74%.
Do savings bonds increase in value after 30 years? ›
If you moved your EE bond into a TreasuryDirect account, we pay you for the bond as soon as it reaches 30 years and stops earning interest. If you still have a paper EE bond, check the issue date. If that date is more than 30 years ago, it is no longer increasing in value and you may want to cash it.
Should I wait 30 years to cash in savings bonds? ›
Although they technically mature after 20 years, these bonds actually don't expire for 30 years. You'll keep earning interest for an extra decade. As long as you cash in your bond at the maturity date, you can guarantee your investment will double.
