Bonds sold by the U.S. Treasury are a means for the federal government to borrow money from American citizens as well as foreign investors. This process dates back all the way to the World War era. There are multiple types of Treasury bonds, all of which involving their own specific terms and interest rates. One of the most popular types of bonds is the Series EE. Series EE Savings bonds have been offered since 1980 and can still be purchased today. They were first introduced as replacements for the original Series E bonds. There are many sources available online for those who are willing to learn more, such as the Amateur Asset Allocator.
As of May 2005, EE bonds earn a fixed interest rate that reflects current interest rates at the time of purchase. The purchaser must retain the bond for at least one year. Within five years, any withdrawal of funds is accompanied by a three month interest penalty. At twenty years, the bond is matured and is guaranteed to double the original purchase value. This essentially offers a guaranteed interest rate of 3.5% annually after twenty years, no matter what the fixed interest rate was determined to be at the time of purchase.
According to Amateur Asset Allocator, Series EE Savings Bonds are some of the most popular Treasury bonds that are available today. United States Treasury investment is attractive to investors who are looking for long term, low risk investments. Although they do not offer the same yield potential as some private market investments, they offer substantial peace of mind for individuals that must rely on their personal savings for retirement. Any retirement plan is augmented by including varying amounts of risk factors, and the guarantee of the U.S. Treasury offers a great foundation for any portfolio.
The author has spent a lot of time learning about ee savings bonds and other related topics. Read more about Amateur Asset Allocator at the author’s website.
