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 | 20-Year Value (Purchased May 2000) |
|---|
| $50 Bond | $100 | $109.52 |
| $100 Bond | $200 | $219.04 |
| $500 Bond | $400 | $547.60 |
| $1,000 Bond | $800 | $1,095.20 |
The bonds have a set interest rate (also known as a fixed rate). You receive interest from the Government every six months. When you reach the end of the bond's term, the Government pays you the full total value or "face value" of the bond.
Are Treasury bonds a good investment for kids? ›
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 Treasury securities in simple terms? ›
Treasury securities—including Treasury bills, notes, and bonds—are debt obligations issued by the U.S. Department of the Treasury. Treasury securities are considered one of the safest investments because they are backed by the full faith and credit of the U.S. government.
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.
How much will I make on a 3 month T bill? ›
3 Month Treasury Bill Rate is at 5.25%, compared to 5.25% the previous market day and 5.10% last year. This is higher than the long term average of 4.19%. The 3 Month Treasury Bill Rate is the yield received for investing in a government issued treasury security that has a maturity of 3 months.
What is one downside to investing in treasuries? ›
So, the risks to investing in T-bonds are opportunity risks. That is, the investor might have gotten a better return elsewhere, and only time will tell. The dangers lie in three areas: inflation, interest rate risk, and opportunity costs.
What's the difference between Treasury bills and Treasury bonds? ›
Key takeaways. Treasury bills have short-term maturities and pay interest at maturity. Treasury notes have mid-range maturities and pay interest every 6 months. Treasury bonds have long maturities and pay interest every 6 months.
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.
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.
Can I open a TreasuryDirect account for a child? ›
If you are a parent, natural guardian, or person providing chief support for a child under the age of 18, you may establish a Minor account within your TreasuryDirect account to purchase EE and I Bonds on behalf of your child. Minor accounts are not available in entity accounts.
What is safer, CDs or Treasuries? ›
CDs and Treasuries Offer a High Degree of Safety
Both CDs and Treasuries are considered extremely safe investments. Treasuries are backed directly by the federal government, while CDs are covered by FDIC insurance – which is also backed by the federal government.
How often do 2 year treasury notes pay interest? ›
Notes are relatively short or medium-term securities that mature in 2, 3, 5, 7, or 10 years. Both bonds and notes pay interest every six months. The interest rate for a particular security is set at the auction.
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.
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.
Do I bonds double in 20 years? ›
How are Series EE and Series I savings bonds different? EE bonds earn a fixed rate of interest, but, regardless of the rate, they are guaranteed to double in value if you hold them 20 years. Series I bonds earn a variable rate of interest that is tied to inflation.
What is the return on bonds for the last 20 years? ›
Average Treasury Bond Yield – Between 3% and 4%
If you purchase a 10-year Treasury at time of writing, you could expect a yield of about 4.45%. Based on yields over the past 20 years, you can expect average interest payments of between 3% and 4%.
Why is my $100 savings bond only worth $50? ›
There are two primary reasons a bond might be worth less than its listed face value. A savings bond, for example, is sold at a discount to its face value and steadily appreciates in price as the bond approaches its maturity date. Upon maturity, the bond is redeemed for the full face value.
