(ThePennyWatcher.com) – In the investment world, there are a variety of terms we have all heard of, but may not have a clue of what they actually are.
Bonds is one of those terms, and while it may seem like a high end wall street term, bonds are routinely used by individuals like you and me for savings and retirement purposes.
So what is a savings bond? It’s a long term investment that provides the ability to be given over as an actual gift!
Savings bonds have a more steady ROI, with a typical bond returning around 7% according to some 2023 data. So while the returns fall short to high performing mutual funds or stocks, bonds are offered protection against inflation, which have made them very attractive these days.
What Exactly Is A Savings Bond?
Simply put, a savings bond is a loan to the U.S. government that i set procured by the U.S. Treasury. When you buy a savings bond, you are lending money to the government.
A cool feature of opening a bond is that you can open it in the name of yourself or someone else, but only the owner of the account can actually cash it out.
Let’s take a look at the two types of savings bonds.
There is the series EE and Series I type:
You can actually buy these direct on the US Treasury website, and you can redeem them at your bank.
A series EE bond has a set and fixed rate and earns interest but also a guaranteed return of double the value if you hold onto it for 20 years, pretty solid we must say.
A series I bond has a rate that combines a few things: a fixed rate and an inflation-adjusted rate calculated a few times a year. This is attractive today with the rise in inflation, as it protects from the inevitable rise of it over time period of your bond.
Bonds may not be for you, but we hope we presented the basics for you so you can do your own research and decide for yourself.
