A bad economy spurs more people to invest in series EE bonds. Series EE bonds are US savings bonds that are sold to individual investors in small denominations. Investors seeking safe investments often consider investing in series EE bonds, since they are free from risk of default.
The interest rate that series EE bonds pay is very low. For example, they pay 1.40% interest fixed rate in 2008. Series EE bonds that were bought in May of 2005 and afterwards will earn a fixed rate of return whereas series EE bonds bought between May of 1997 and April 30, 2005 will earn interests based on the current market rates.
Buying series EE bonds is easy. The US Treasury Department has made it possible to buy them online through a governmental website. However, you can still buy series EE bonds at your local financial institutions or banks. Many employers also offer the option of buying series EE bonds through payroll deduction programs.
Nowadays, many people take advantage of the availability of US savings series EE bonds online. When investing in series EE bonds, you can choose between electronic series EE bonds or paper series EE bonds. Paper series EE bonds start at $50 denomination whereas the smallest denomination of electronic series EE bonds is $25.
While paper series EE bonds are sold at 50% of their face value, electronic series EE bonds are sold at the full face value. That means, to buy series EE bonds online, you pay $50 for a $50 series EE bond whereas you only pay $25 for a $50 series EE bond certificate.
As for how long you need to hold series EE bonds for, the rule is that you must hold them for at least a year. But, after that, you can redeem them with penalty. Many people hold series EE bonds to maturity which is 30 years after the issue date.
There is a penalty to redeeming series EE bonds early. The penalty is that you forfeit the latest three months of interest payments if you redeem series EE bonds within the first five years. After five years, you will not pay any penalties.
Series EE bonds are great, solid, and safe investments that many investors hold in their portfolios. Their interest payments are fully guaranteed by the US government. Series EE bonds can be used for many purposes such as for education funding and retirement funding.
