California Municipal Bond Advisor Magazine Article

U.S. Savings Bond Types - EE Savings Bonds, Series I Bonds, Series E Bonds

Thousands of people across the country are invested in the U.S., not just legally through taxes, but by choice through U.S. Savings Bonds. A savings bond is a note that is issued by the government to recognize that they owe the buyer money, in essence the people of the United States who buy Savings bonds are loaning the government money. The government, in turn, has agreed to pay the lendee back within a certain period of time at a particular rate of interest.

EE Saving Bonds

EE bonds are very popular U.S. savings bonds. These bonds are not transferable and gather interest for up to thirty years after the issue date, so they make good gifts for family or a good method to begin a savings for children, as there is a penalty for cashing the bond within the first five years. Some more interesting facts about EE bonds:

* They come in denominations of $50 , $75 , $100 , $200 , $500 , $1, 000 , $5, 000 and $10, 000. * They were first issued in January 1980 * They are purchased at half of their face value and accrue interest until they are cashed, up to 30 years. Series E Bonds

These savings bonds are also known as 'War bonds' because they were issued starting in May of 1941. E bonds were replaced by EE bonds in 1980 and were the longest running bonds available to American investors. They come in denominations ranging between $25-$10, 000, and they are also non-transferable. Some issuing facts:

* They are purchased at 75% face value * Bonds purchased between 1941-1965 carry their interest for up to 40 years * They have a guaranteed mimimum investment yield of 4 percent compounded semiannually for those with maturity periods after March 1, 1993.

Series I Bonds

I bonds are relatively new, having been issued first in 1998. They were issued to protect investors from inflation, and therby have a unique interest rate calculation based on the inflation rate and the fixed interest rate that the government sets twice yearly. I bonds can be purchased in denominations that range from $50 to $10 and are purchased at face value. They accrue interest monthly and compound interest for up to thirty years. Other interesting facts about I bonds:

* They can come in book-entry or definitive form * Can be purchased through banks or through your employer * investors cannot exchange I bonds for HH bonds * They must be held for a minimum of 12 months

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