Types of Investments : Saving Bonds

Saving Bonds Basics :


For those who are knowledgeable in the financial domain, Savings Bonds have been the medium of choice to reach their savings ends.

Why?

It's because they have lots of advantages that have assisted to make them so popular.

Savings bonds are debt securities issued by the government’s Treasury department to assist in paying for government’s borrowing needs. Savings bonds are considered one of the safest investments because they are backed by the government.
These are liquid investments, which means it's easy to cash in your savings bonds anytime whenever you need the money. There's no penalty if you cash in your savings bonds anytime after the first six months that you've owned them, and you can cash them out at any bank.

The principal and interest of savings bonds are guaranteed by the credibility of the government. If you ever lose a savings bond, it can be replaced.

Interest on savings bonds is tax-exempted from state and local income taxes. Federal income taxes are postponed until you cash your bond, or until it stops earning interest (+ - 30 years down the road).

Another benefit of Savings Bonds is that the interest can be excused from taxes if the bonds are used for college expenses for the bond owner, the owner's spouse, or a dependent.

When a savings bond reaches maturity, it doesn't stop accumulating interest. It is automatically extended, and can be extended for additional periods following that. Interest continues to increase on the bonds during these extensions.