Posts Tagged ‘united states government’

How Do Savings Bonds Work?

Friday, April 10th, 2009

What are Savings Bonds?

Savings bonds are a major offering in credit unions and at banks. It is important to know what savings bonds are all about so that you can understand whether or not they will benefit you in any way. This page is going to take you through some of the basics of what savings bonds are and how they are used.

What are Savings Bonds?

Savings bonds are securities that are issued by the United States Treasury Department. They are designed to provide funding dollars for the United States Government. In return for making use of your money, the government can then pay you interest. This discussion is going to specifically focus on covering EE Savings Bonds and I Savings Bonds.

How much interest is earned in Savings Bonds?

The interest rates generally depend upon the economic conditions. As interest rates in general begin to rise, so will the interest rates that are paid on these savings bonds. If you are looking for exact numbers based on the current conditions, the best resource is the website for the Bureau of Public Debt. In general, you will find that the interest rates are fairly competitive as far as safe, government backed investments go, and you may even benefit from additional tax incentives to enhance the returns that you receive.

What Tax Benefits are offered by Savings Bonds?

This is really going to depend on your individual situation. Depending on your situation, you may be able to earn some really nice benefits simply by using savings bonds. For starters, for example, savings bonds do not pay periodic interest that is subject to an income tax. Instead, they increase in value over the span of years. What this means is that you can delay claiming the interest until your bonds are redeemed, or until they mature, which is around 30 years following their issuance. If you do not want to claim the income now, but you want to claim the income later instead, then savings bonds can make this possible.

Another tax benefit that is associated with savings bonds is the Educational Tax Exclusion, or the Educational Savings Bond Program. If you cash your bonds in for use for qualified higher education related expenses, you may be able to exclude that income all together from your taxes. It is important that you are sure to follow the rule regarding the expenses, income limits and other regulations that exist if you want to take full advantage of this. For more information about this exclusion program, visit the website for the Savings Bond for Education Program.

Finally, savings bond interest is exempt both from state income taxes and local income taxes. What this means is that you can spend more of what you earn without worrying about the taxes. Depending on your state that you live in, this may be a big deal, but it may be insignificant instead so find out about your state’s regulations before you invest.

Photo Credits: 1

Originally posted 2020-12-10 05:03:46. Republished by Old Post Promoter

Related Articles
  • What Are Safe Investments?

    What are safe investments?

    If you are putting consideration into investing money, but you are not sure which is the safest way to invest your money, then your first stop should be someplace where you can get professional advice on the subject. The last thing that……
  • 401K Planning 101 If you are young, and you are just beginning a career, then the idea of retirement planning may seem so very far off that it is probably the last thing on your mind right now. But if you are on the other side of the fence, and retirement is approaching……
  • Is Some Debt Good For Your Credit?

    Does debt improve credit?

    There is no doubt about this, first of all: Getting into debt is more than capable of getting you into trouble. Although there is definitely a large downside to debt, borrowing money can also do you some good. Some debt is actually……
  • Should You Be Worried About the Economy?

    If you are worried about gas, try carpooling.

    If you follow the news, chances are the state of the economy may have you a little concerned. Bad news is rampant, the housing market is shaky and doom appears to be around every corner. While there are……
  • 4 Tips for College Students Budgets

    Study and Save Money

    If you are a college student, then your primary focus is probably set on your studies and trying to maintain your education so that you will be benefited in the future. Unfortunately, one of the things that you may not be putting……
Related Sites
  • December 11
  • Pentagon reviewing what it can do without – United Press International United Press International Pentagon reviewing what it can do without United Press International … Treasury Secretary Timothy Geithner and Office of Management and Budget Director Peter R. Orszag….
  • Inflation and Retirement Investing As baby boomers in the home stretch towards retirement, we have two major concerns about our retirement investing.  The first is recovering from the severe damage our retirement nest eggs suffered from the recession and market downturn that began in 2008.  The second concern is preparing for the threat of……
  • Stakes are high for U.S., China during Clinton visit     When Hillary Clinton visits Beijing this week, her Chinese hosts will closely watch her body language and parse her every word. Her first trip here as the U.S. secretary of state comes in the shadow of the global financial crisis, the pressing North Korea nuclear issue and a……
  • Illegal Immigrants in Obama’s Family? President Obama’s aunt appealed her order for deportation today, extending her time living in public housing in Boston for at least another 10 months. According to Fox News, Obama’s aunt, Zeituni Onyango, lost her bid for asylum over four years ago, but has continued to live illegally in the United……

How do Savings Bonds Work

Friday, March 27th, 2009

Wondering Why You Should Invest in US Savings Bonds?

Are you wondering why you should invest in United States savings bonds, or how savings bonds work? This is a question that not enough people are considering these days, because most people are pressing their luck instead by gambling with stocks and other investments. So many people are turning to penny stocks thinking that they cannot lose, but this thrilling stock market is no way to turn a buck. Instead, people should look at savings bonds as a valuable part of an investment portfolio even if they do not appear to be as exciting as an investment.

First of all, you need to understand what a U.S. Savings Bond is if you want to take advantage of these lucrative investments. Back in the day, savings bonds were a popular form of long term investment for people who could not afford to buy common stock. This is back when a long term investment was only an investment that lasted longer than a couple of weeks. There are plenty of different savings bond options available to you out there, but the ones that are the best and the most worthy of your time are the ones that are backed by the United States. At their basic level, these savings bonds are a promise that if you lend money to the government, you will get it back with interest attached. The one risk lies in that the entity you lend to may not be able to pay it off as they have agreed to. However, when lending to the United States Government through US treasury bonds, the risk is a great deal less. Unless the entire American government goes bankrupt, you will eventually get your money back and you will earn interest in the process.

For all intents and purposes, you are lending money to the government when you purchase a United States savings bond. In the days of huge deficits, it is much easier for the United States government to raise money by selling US treasury bonds and savings bonds than to have to go to foreign lenders who require much larger interest rates and much higher returns on their investments. US treasury savings bonds are better for the government and the country because they do not require American citizens to pay taxes to pay foreign governments back for their loans.

Not only is this a lucrative deal for the government when it needs financial assistance, but because of compounding interest, it is also a lucrative deal for you. If you begin with a $1000 initial investment and make $50 monthly deposits, after taxes your nest egg would be nearly $20,000. Increase the interest rate by only a little bit to 3 percent and you will have a nest egg of $22,000 or more. If you think you can put away $100 a month instead of $50, your nest egg will grow exponentially to $42,000. There are also tax benefits associated with these bills that you will want to look into as well.

Photo Credits: 1

Originally posted 2020-11-26 05:01:05. Republished by Old Post Promoter

Related Articles
  • Setting Goals for Good Personal Finance

    What are your goals?

    Setting goals is an important part of your personal finance plan. Goals can be divided into four unique categories that are relatively general in nature. These categories are short term goals, intermediate term goals, long term goals and life goals. Short Term……
  • Searching for a Legitimate High Yield Investment?

    Flying high on investments? Avoid scams!

    If you’re just getting started with investing, you’re probably searching high and low for a legitimate high yield investment to sink some money into and make lots of profits. Everyone wants to find those high yield investments so they can……
  • What Are the Best Small Investments?


    In times of uncertain economic future, it is important to look at your investment strategy and tweak it as needed. One of the ways that you can improve your portfolio is to take on small investments with lower risks associated with them. Taking in smaller……
  • Should You Be Worried About the Economy?

    If you are worried about gas, try carpooling.

    If you follow the news, chances are the state of the economy may have you a little concerned. Bad news is rampant, the housing market is shaky and doom appears to be around every corner. While there are……
  • To Borrow or Not to Borrow against a 401K Question – Because of the credit crunch, is this a good time to consider borrowing against a 401(k) savings as a means of paying off other loans? My current 401(k) planning investment return is 5 percent, and the interest I will be paying on it is 9 percent.

    Safe investments are the safety net of your personal finances.

    If you are trying to accumulate wealth, set aside money for the future or you would just like to have a few more streams of income coming in, investments are usually the first thing people turn……
  • Tips for Managing Your Money Wisely With a few tips for managing money wisely, you should have no problems putting together a good working budget and learning how to manage your money. Here are some excellent tips for managing money wisely that will give you a great platform for getting started.

    Wondering Why You Should Invest in US Savings Bonds?

    Are you wondering why you should invest in United States savings bonds, or how savings bonds work? This is a question that not enough people are considering these days, because most people are pressing their luck instead……
  • Child Savings and Investment One of the options that is available to some people for savings and investment is the child trust fund vouches which is available for children born in the United Kingdom following September 1, 2020. Any child that is born in the UK after September 1, 2020 is entitled to a……
Related Sites
  • You Can Make Money With Borrowed Money The wealthy people of the world get wealthier from “free” money – the interest their account balances and investments earn over time.  There are ways the rest of us can earn a little extra money from borrowed money – and if done correctly, we won’t be charged more in interest……
  • Apparently paying cash for something is now headline news “ Recently Published/Updated – Student cashes in savings after private loan falls through” My first thought when I saw that headline was, “Huh? Paying cash for school is now headline news? I guess people really DO assume that you can’t go to school without loans anymore.” So of course I……
  • Why Tax Free Municipal Bonds are Great Investments in Obama’s America When President Obama was elected, the political tide began to lean in a direction that no longer favored the wealthy. The emphasis moved award from President Bush’s idea of an “ownership society” and moved toward benefiting the lower and middle class. Whether one agrees with the president’s politics or not,……
  • Do Not Cash Out Your 401k A friend of mine is hit hard by the 40% plus drop in his 401k and the daily gyration haven’t made it any easier.  He was seriously considering cashing out of his 401k and stop contributing altogether.  After a long conversation with him, I was able to explain to him……
  • Online Savings Rates Drop as Fed Rates Fall The Federal Reserve met this week and decided to lower the interest rate at which bank can lend each other money to 4.5%. With fears of a continued slump in the real estate market and an overall slowing in the economy, the Federal Reserve have dropped rates from 5.25% APY……