Savings bonds?
by admin ~ April 3rd, 2007 . Filed under: Personal Finance .
kleasure asked:
I have a nephew who will be turning one soon, and i always hear about people who purchase savings bonds for kids, and then when the kids are adults they can cash them for things like college/house/car etc..
I have a nephew who will be turning one soon, and i always hear about people who purchase savings bonds for kids, and then when the kids are adults they can cash them for things like college/house/car etc..
i would like to start doing this for my nephew.
my question is-
where do i get them?
is there a best one?
exactly how do they work..?
Sun Cestero
April 5th, 2007 at 10:33 pm
you get them at the bank, any bank
there is no best one, they are issued by the federal government
as the child grows up the bond will reach full maturity or the face value of the bond, then if they hold on to it it will gain more interest making it worth more then the face value.
April 6th, 2007 at 6:33 pm
Savings bonds are issued by the government in different denominations, so there really are no bad ones. Although they tend to pay a lower interest rate than corporate bonds, they are guaranteed by the government and as such are safer, making them a good vehicle for kid’s savings.
For more info, try here:
April 7th, 2007 at 3:41 pm
Where to Buy:
1)TreasuryDirect - This is the easiest, fastest way to buy Series EE bonds. The bonds are issued directly to you in your TreasuryDirect account. No paper bonds are issued. You have access to your account 24 hours a day, 7 days a week.
You can set up an automatic purchase schedule of as little as $25.
2) Banks and other financial institutions: The paper bond is printed to your instructions and mailed to you in 15 business days. Your bond’s issue date reflects the date of purchase so that no interest is lost.
3) Internet banking systems: You can purchase paper bonds through online account access with many local financial institutions. See if a financial institution in your area offers this service.
4) Payroll Savings Plan: You can buy EE Bonds through the Payroll Savings Plan if your employer offers it. Payroll for paper savings bonds and Electronic Payroll are available.
You can either buy them at face value with returns over the inflation rate (Series I), or buy them at 1/2 face value and earn a fixed rate of return, which reset every 6 months (Series EE)
Denominations are: $50, $75, $100, $200, $500, $1,000, $5,000 for both I and EE and $10,000 for Series EE. Cost is full face for Series I and 1/2 of face value for Series EE.
Maximum value an individual can spend is $5,000 per year per type of bond. For example, one person can spend up to $20,000 every year: $10,000 (costs $5,000) in paper EE, $10,000 (costs $5,000) in electronic EE, $5,000 in paper I and $5,000 in electronic I.
Once purchased, bonds must be held for 12 months before they can be redeemed. If redeemed within first 5 years, you forfeit 3 months of interest.