EE Savings Bonds

EE savings bonds are a way for investors to take advantage of both security and short term investing. Normally, long term investments are associated with higher amounts of security. EE savings bonds incorporate the security made available with long term investments and package it in a short term contract. The United States government guarantees EE savings bonds and pays out a certain amount of interest. Interest is earned during the life of the bond. The amount of interest that is paid heavily reflects the interest rates of the markets. After six months, the investor can cash in their EE savings bonds.

Another interesting fact about EE savings bonds is they are exempt from both local and state taxes. Investors, who use EE savings bonds for expenses like college, will avoid paying federal taxes on these types of bonds. A big advantage associated with these types of bonds is that they do not change in value. Traditional bonds may fluctuate in value during the life of the bond contract. This creates a certain amount of risk but also a certain amount of opportunities. With EE savings bonds, the value of the invested principal amount will not change. Investors will see a return through interest and receive their principal back in full at the end of the bond contract.

Investors with a fixed income portfolio are highly encouraged to diversify their portfolio with series EE savings bonds. These types of bonds can be purchased in two different ways. They can be either electronic EE savings bonds or paper series as well. With electronic EE savings bonds, the investor can purchase them at face value. For example, if the investor purchases a $100 electronic EE savings bond, they will be redeemed the full $100 at the end of the bond.

Paper EE savings bonds work a little different. When the investor purchases an EE savings bond for $2,000, they only have to pay $1,000 in cash. Basically, paper EE savings bonds are sold at half price. Every year the investor is limited to purchasing only $5,000 in paper EE savings bonds, which equates to a face value of $10,000. Smaller investors who are interested in EE savings bonds have more flexibility when purchasing electronic EE savings bonds. When the investor chooses the electronic route over the paper route, they are allowed to invest as little as $25. Another advantage with electronic EE savings bonds is the ability to invest to an exact penny, whereas paper EE savings bonds are denominated in whole dollar values.

Where do investors purchase these types of bonds? There are four main ways that investors can purchase series EE savings bonds. The first is directly from the Treasury Department online. Bonds are distributed directly to the buyers account in an electronic format. Purchasing the bonds directly online does not allow the buyer to purchase bonds in a paper format. Local financial institutions and banks also make EE savings bonds available to their customers. They provide EE savings bonds in paper format. These types of bonds can also be purchased from many financial websites. Some offer EE savings bonds in both electronic and paper format.

And finally, EE savings bonds can be purchased through an employer. They can be purchased from the employer through a payroll deduction system. Employees who take advantage of this strategy will quickly forget the amount that they are paying themselves. Over the long run, they will see a significant amount of money that they have invested. There are many options for people to purchase EE savings bonds, and they are not only for professional investors. Anyone can purchase an EE savings bond right away.

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