Increase Your Money With Savings Bonds |
Low interest rates means the Series I Savings Bond is an increasingly powerful, conservative and high-return investment in anyone's retirement portfolio. |
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Contact Information |
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Isaiah
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414-537-0245
thompson9829@eyemeetings.info
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The Series I savings bonds are being issued at an unprecedented rate compared to recent historical activity. Within the last year, 5 times more Series I were issued than the Series EE. Before this, they were on equal footing, with the Series I only edging out the EE by about 20%.
The reason why everyone has switched over is because of the dismal rate of returns of stocks, CDs, corporate bonds and other instruments. The Series I has such a high rate because it includes not only a basic interest rate, but also an inflation-indexed rate which only rises with inflation. That means the current rate of the Series I is about 3 times higher than the EE.
The inflation adjustment happens every six months and is calculated to provide protection against rising levels of inflation. However, note that if the inflation rate goes negative, then the Series I returns could drop also, but never below zero! That means your investment will never lose money. The downside of the I compared to EE is that the EE guarantees a minimum rate of return at 20 years but this is not true for the I.
The Federal Reserve has been trying to boost investment and economic growth by keeping Central Bank rates low, which in turns has made bank deposits, certificates of deposit, short term bonds, money market accounts all yield very low returns. The inflation-indexed Series I is one of the few to provide a reasonable return still.
There are some risks but these are considered so small that few people think about it. In order to lose money on the Series I, the US Government would has to stop paying off its debts. Has the US Government ever defaulted on its obligations? Never.
One other caveat is that if you hold the bond for less than 5 years there will be a 3 month penalty, that is, you don't get the interest from the last three months. This is to discourage quick buying and selling that adds to administrative burden of the Federal government.
For qualified educational expenses it is possible to avoid paying taxes on your earnings. Look into the Treasury website for more details on how to take advantage of these tax qualifications. Bonds make great gifts for young people who might use it for college education. They are even issued in the name of the minor, something not possible with other types of instruments.
To buy them, go online to the Treasury website and create an account. Use your checking account number to route funds. You will not get a paper copy as the paper form of bonds were phased out several years ago. All purchases are through the Treasury website. You are limited to buying $5000 value of bonds every year.
To learn more about the savings bond, checkout online sources of information. The articles provided for savings bond website will be informative to many.
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| Related Tags: bonds,government bonds,stocks |
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