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US Savings Bond: The Gift that Keeps Giving

By Edited Nov 13, 2013 0 0

Savings Bond
A savings bond issued by the US government makes a perfect gift for the hard to buy. They are also perfect for children who have yet to learn the value of a dollar. Many times grandparents will buy these for their grandchildren along with a small gift to open up. This gives the child instant satisfaction of opening a gift, and help form a bond to secure the child's financial future. Another reason that government issued savings bonds are perfect, is because they are not a high risk investment. They are backed by the US government and do not carry the penalties that some saving plans do. Of course, there are some penalties. Just on the interest of some government series bonds cashed in before mature date, but nothing tragic, no fees.

Series E and EE bonds will double their value at their maturity date. So if a savings bond value reads $100.00, the buyer pays $50.00 up front. The bond will collect interest and when it matures the value will be $100.00. It can take up to 20 years for a US savings bond to mature, but it will continue to collect interest for 30 years.

Series I bonds will read the exact amount that was paid up front at the time purchases: bond reads $100.00, buyer pays $100.00. This US savings bond series is good for shorter term, many times will draw more interest than the series E and EE.

When someone buys a bond they should consider the current interest rate each series is earning. Bond rates are available online a the US Treasury website and the information is available at financial institution as well. As children age, it might be more important to buy a bond that doesn't have to reach a long maturity, especially if using it for educational purposes. This brings us to another consideration, when buying a bond check with an accountant or financial adviser for tax breaks that are associated with using a US savings bond for educational purposes. It will have to be done just right or the interest will not but tax free.

Once a person decides to buy a US savings bond, it can be obtained directly from the US Treasury website or any financial institution or bank that uses the federal reserve. Upon buying a bon a receipt will be issued and the actual official document will be receive in the mail at either the address the bond is in or at the bank it was purchased at. Upon receipt of the official bond, the number should be stored in a safe location. In another location the bond itself should be stored in a fire safe location such as a safety deposit box.

When buying a bond certain information is need. The name of who it will be issued too, their social security number and address. Another item of concern is a POD name, that makes the US savings bond payable to another person should the 1st die. This is another item that should be discussed with an accountant or financial adviser. It can be tricky as it can play a part in using the money for educational purposes, but it can also play a part in the beneficiary in the case of a death. Of course, the bond can always be placed in a mature responsible adults name and a child's name to keep the child from being irresponsible with the funds.

Just think how much fun and what a learning experience it can be for a young child who receives a bond as a gift. They can go to a US savings bond calculator online, keep up with the amount of interest they bond is collecting, and learn the value of a dollar. It's gift that keeps giving, or least for 30 years.

Warning: Be extra careful when buying bonds online. This is very sensitive information and the last thing anyone would want is to be scammed or a victim of fraud. Only buy from the actual US Treasury website or a trusted financial institution.


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