U.S. savings bonds

What are savings bonds, and are they right for you? 3 main factors to help you decide

You must consume information from various resources when looking at the most effective way to turn your savings into a passive income. You want to ensure you are making the right decision for yourself and your wealth.

The internet allows you to consider information from all manner of sources and find out which savings bond best fits you. You can look at many different types of bonds, and we will give you a breakdown of some of the best on the market.

Before the days of the internet, you would contact your bank to see what products they had available for you and whether they could recommend suitable investment products. However, savings bonds work slightly differently, as the central government issues them. With such a broad selection now available, it is a case of performing your research and making an informed decision.

Savings bonds defined

You lend money to the central government when you purchase a savings bond. In the United States, for instance, if you take out a savings bond, you agree to loan your money to the government. So, although it isn’t considered the highest-grossing investment, it offers a security that not many other investments do.

Although you may benefit more from investing in stocks than if you take out a savings bond, it is backed by the government, so it is improbable that you will not see some return.

The benefits of savings bonds

The key reason people take out savings bonds is because of the security they provide. As a result, you do not need to worry about a risky investment. For example, if you put your savings into volatile assets such as cryptocurrency, you could lose all of your investment, which adds much stress to your life.

Savings bonds are a tried and tested method of providing slow marginal returns over a set period. People turn to these financial savings products as they provide stability and a return you wouldn’t get if your money just sat in your bank account.

Unlike real estate investment, where you need to ensure that you are maintaining a property, which can come with unseen overhead costs, a bond is a simple case of purchasing and holding.

Negatives of savings bonds

Saving bonds are probably not a good option if you want to make a significant return. On the other hand, if you pick safety over risk, they are right up your street.

Ultimately, the choice is yours. You should always consult a financial specialist before you decide on your savings, and you should view anything you read online as opinion and information only, not as advice.

The fact that the return is low might not even be negative for you. However, when inflation is much higher in the West than at any point in the century, having a low-interest paying bond might not seem like the most profitable plan. Another critical thing you may want to note is that you will receive a penalty if you withdraw money from a savings bond too early.

Types of savings bonds

savings bonds
Series EE savings bonds – Credit: STOCK IMAGE

Many banks will offer different types of investment products. In addition, they will look to provide specialist accounts or funds with a specific rate of return. They differ from savings bonds, as the central government sells them. In America, they fall into two categories:

  • Series EE – These bonds are sold at face value and are worth their total value upon redemption. These bonds offer a fixed interest rate, which you receive when the bond is redeemed or matures.
  • Series I – These savings bonds were first sold 25 years ago. Like the Series EE bonds, Series I bonds are sold at face value. These bonds offer a rate of interest that helps mitigate inflationary pressures, so the interest rate isn’t fixed. For example, If inflation increases, the interest rate on the product will be adjusted accordingly. Conversely, your bond will not lose value during deflation, so this is a more flexible bond to consider.


No two people have the same amount of wealth or the same overall game plan when it comes to investing. For example, you might want to make money in the short term or just look for a dependable product that offers dependability and doesn’t surprise you.

Either way, you must consult various sources and speak to friends, family or a specialist who provides financial advice on a professional basis. Once you have collated all of the information, you can make an informed decision about your finances and whether a savings bond is right for you.

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