Are Saving Bonds Worth Your Time and Money?
Nobody can predict the future, right? Those financial surprises could sneak up on you anytime, and that is the main reason why you need to save religiously. In fact, saving should be a part of life starting from a tender age as its importance cannot get overemphasized. The idea behind it is to create a safety net for the trying times or to accomplish your goals in life. Here we’re talking about that dream car, boat, house or even college tuition and more.
US savings bonds are an excellent place to start. They offer an investment opportunity for people looking to save little sums continuously or significant amounts at a go. Whatever your choice, the US treasury has got you covered. You can get started for as low as $50!
Know Your Options
If you are looking to complete short-term goals, this is not your thing. The bonds are ideal for people who can invest and forget for about more than 10 to 20 years. The first option is Series EE, the most notable feature of this bond is the fact that is costs half its face value. After maturity, you can cash it out at your bank and get the face value. Available denominations start from $50 – $10,000. However, you can only purchase them annually and earn interest for the next 30 years.
Series I bonds are similar to the EE series, so you can get them from the treasury direct and accumulate interest for up to 30 years. Investment plans start from $50, $75, $100, $200, $500, $1,000, $5,000, and $10,000. Additionally, you can contribute through payroll deductions and redeem it in your bank or the Department of the Treasury’s site when it matures.
Do You Save Faithfully?
Are you struggling with saving for your future? You are not alone, many other people find it hard to save-up, but only the smart ones turn to savings bonds. There is an option to save “automatically,” where you make necessary arrangements with your employer for regular cuts. That way, you’ll never miss a single month! These bonds are secure and cushioned against inflation.
When your last born finally reaches college, these investments will save you from making hard choices in your old age. Also, it can be useful for survival between college and finding a job. After the cashout, you’ll thank your younger self for having a disciplined saving habit.
Saving Bonds are Stable Investments.
There are so many other investment options like cryptocurrencies, stocks and other bonds; none is more robust than these particular bonds. You’ll never have to worry about any additional fees associated with other investments. Here, what you see is what you get. Besides, it has already worked for thousands of other people. But as they say, the low-risk investments attract small rewards.
No Intermediaries, Just You and the Treasury
Ever encountered a scrupulous broker? Sometimes, these people sell items almost double their real cost. If the client falls into the trap, they walk away thinking they have the best quality product or services hence the inflated price. But in the real sense, they make a living by giving the illusion of luxury.
The US treasury leaves no room for them. They sell the saving bonds directly to citizens, and you cannot resell them. In the event of death, there is a procedure to recover the funds that may involve going to court. Every payment gets recorded alongside your social security number, and there is practically nothing that could come between you and the payout.
Though saving is securing your future, living the moment is also important. From as low as $50, you can start saving today. Besides, the amount is reduceable to four equal parts that your employer can deduct weekly. No matter how little this effort seems, it does add up with time.
What You Need to Know Before Purchasing Saving Bonds
1. There is a Penalty for Early Cashout
There is nothing like a rosy investment, even solid ones like these come with some cons. Somewhere along the way, you might think of redeeming your bonds before maturity. That is a pretty bad idea because it makes you lose part of the face money. But since it’s your money, they’ll still give it to you. Also, the bonds seize accumulating interest after 30 years.
2. Interest rates are subject to change.
When it’s finally time to redeem your bonds. Use a saving bond calculator to determine the current interest rate and potential payout. Timing matters too – cashing out before the next interest announcement could make you miss out on higher prices, and if you cash out immediately after the report, you’ll lose six months’ worth of interest.
Savings bonds are an excellent investment option for employed people and those who want to diversify their investments. Now that you have this detailed review, you can use it to make a sound decision. Good luck!