How Safe Are Series EE Bonds

Series EE bonds are US savings bonds that are considered very safe investments. More people invest in Series EE bonds when the economy is bad (like it is today) and the market is unpredictable. Investors with low risk tolerance prefer to put money in series EE bonds than to risk it in the volatile stock market.

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.

Not only you can buy paper series EE bonds the traditional way, you can now buy electronic series EE bonds. You can buy series EE bonds online or at financial institutions or banks. Many companies also offer employees the ability to buy series EE bonds through payroll deduction.

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.

Some people are confused how much they are paying for series EE bonds. Paper series EE bonds are sold at discount, half price to be exact. Electronic series EE bonds, however, are sold at face value. That means, to buy a $50 series EE bond, you pay $50 if you buy online or pay only $25 if you buy paper series EE bonds.

Bonds are often long term investments. Series EE bonds must be held for at least a year before cashing out. The interest on series EE bonds accumulate for 30 years. The longer you hold series EE bonds, the more interests and value at redemption.

If you redeem series EE bonds before 5 years after purchase, there is an interest penalty. The interest penalty for early redemption of series EE bonds is the most recent interest payments for 3 months. If you redeem series EE bonds after 5 years, there is no penalty.

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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