When the stock market is bad, more people seek refuge in safe investments such as in the excellent series EE bonds. Series EE bonds are US savings bonds that are considered default-risk free. They are low risk savings that pay interest for up to 30 years.
When investing in series EE bonds, you can expect interest payments but the interest rates that series EE bonds pay at are very low. 1.5% is a common interest rate of series EE bonds. Fixed interest rates apply to series EE bonds that are bought in May 2005 and thereafter. Before that, series EE bonds pay 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.
The smallest amount of money you need to invest in series EE bonds at a time is $25. If you buy paper series EE bonds, your $25 will buy a $50 series EE bond. However, if you buy electronic series EE bonds, your $25 will only buy a $25 series EE bond.
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.
Series EE bonds, like other bonds, should be held long term. The shortest time you must hold series EE bonds is one year. After that you can redeem them. Interests on series EE bonds, however, accumulate for 30 years but early redemption is possible.
If you redeem series EE bonds early, there is a penalty. Most people hold series EE bonds for at least five years because if you redeem series EE bonds before 5 years then you will not receive the latest three interest payments. If you wait until the five year holding period is up, you will not incur penalties when redeeming series EE bonds.
Since series EE bonds are guaranteed by the US government, they are considered one of the safest investments around. People buy series EE bonds for many reasons, not just for investments but also for education funding as well as retirement funding. Best of all, Series EE bonds come in many different denominations and are extremely flexible for your budget.
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