How to Sell Savings Bonds

If you are American, buying US saving bonds is an act of being patriotic; it helps Uncle Sam and benefits you. The bonds you buy helps the USA to finance the country’s borrowing requirements, keeps fiscal programs going and it also means that you might be helping the unemployed who through no fault of their own lost their jobs to get back into productive work and get the economy going back on track.

The best thing about US savings bonds is that they are very safe, in the worst case if you were to invest $400 to buy a bond, the value of this bond will never be less that $400, and that’s guaranteed. There are very few saving schemes that can offer you such a low risk investment. Better still, they pack an interest rate punch. If you are not sure, you can check popular independent interest rate look up tables to discover that US saving bonds deliver the most competitive rates and the series I and series EE have their rates reviewed and change on a bi-annual  basis, this happens in May and November.

Now comes the best bit, the dividends or interest you earn on your bonds are completely tax free, this is very different from other saving schemes. The important point to note is that the compound tax deferred value is not calculated until you sell the savings bonds. Therefore, you are not forced to pay out for future benefit, but rather can pay that when you get the payout and that has to be good news. In addition, if you are looking to use your savings bonds to pay for an investment, for example, university studies; there will be no tax to pay; it makes sense to spend a moment checking the tax exemptions for funding higher education. All the details are available on popular websites that deal with this subject.

If you decide to sell your bonds before their maturity, there are a series of simple steps to follow to ensure you get the best results. What you will be doing is selling your saving bonds that have not yet reached their maturity on a market that is known as the “secondary market” and you should use a bond broker or trader. What this broker or trader will do is to list your bonds (still not yet matured) as available on the best market lists, remember you should never accept a price lower than what you initially paid for your savings bonds and you need to pay particular attention to this point. The bond broker or trader will obviously charge you a commission, no one works for free, but you should expect them to get you the best possible deal. Before you commit to a particular broker or trader, do a little bit of research and check with people you can trust to tell you about their experiences if they too are familiar with saving bonds.

The trader or broker will list your bonds on a market that is known as the over the counter market, in this way you can hope to sell at the best possible price and this will offset the commission charges easily. You need to decide the parameters that will govern your sale of savings bonds. You should also decide if there is a deadline to sell the bonds and you need to advise the broker or trader accordingly or maybe the most important thing is to sell all of the bonds together in order to get the best price. Do take time to decide what works best for you. These options are known as All or Kill (AOK) and All or None (AON) respectively.

Oftentimes, saving bond sellers lament that they are ripped off by unscrupulous dealers who are no more than sham merchants. You do not want this happening to you so always involve your bank or trusted financial institution to double check the identity and credentials of the broker or trader. Most fraud merchants will run away immediately if you ask if it is alright to talk to your bank.

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