What Is a US Savings Bond? A General Overview

For anyone interested in investing or starting a nest egg for retirement or education, savings bonds are a good option. However, many people are unaware of the history and general information about savings bonds.

What Is a Savings Bond?

A savings bond is an investment option offered by the US government. Bonds are used by the government as a way to pay off its debts and grow the amount of money the government has at its disposal. Bonds are handled by the Treasury Department and are offered in various values ranging from $25 to $10,000.

What Is the History of Savings Bonds?

The savings bonds program was started in 1935 by President Roosevelt. During World War II they became immensely popular as they were touted as a way to support the war effort. After this, families began investing in savings bonds as retirement options and as a way to ensure their children had money for college. Bonds are still common today, especially as a way to save for education expenses.

Where Are Savings Bonds Available?

Although bonds were originally available in paper form through financial institutions, that ended in 2012. Now, bonds are only available online through the Treasury's website, However, this makes them very accessible and, with an account on the site, it is easy to keep track of any bonds you buy. The maximum purchase allowed per calendar year is $10,000.

Why Buy a Savings Bond?

Since they are issued by the government, savings bonds are a very low-risk way to invest. They also do not require much knowledge about investing, making them a great option for first-time investors. Although cashing them out before the maturity date results in an interest penalty, their ease-of-use is a definite positive. A bond holder cashing out before 5 years must forfeit three months of interest but after 5 years there is no penalty. A savings bond must be held for at least 1 year before it can be redeemed.

Savings bonds have been available for nearly 80 years and have been a cornerstone for many Americans to accumulate long term savings in a low risk manner. Now that they are available online, it is even easier to buy bonds and keep track of them.

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