Understanding The EE Bond

By | October 3, 2013


The bonds that are available are varied and this is why it is vital that you fully understand the bond so that it matches your needs. The EE bond is only available in electronic form, the paper bonds are no longer being issued but as the length of time that a bond is current for, thirty years, then there are going to be some paper bonds still in existence.


As they are a government backed bond the risk is classed as a low risk, this will mean that the rate of return that you can expect from an EE bond is going to be considerably less that in a high return option. But your capital is safer in a low risk bond; your money just doesn’t grow as quickly.


The coupon value is the interest payments that you will get from the bond. The coupon value is set at the date of purchase at the moment the rate is 0.20% this was set on May 1st and it is not due to change until after 31st October.

You are able to cash the EE bonds in once you have held them for a year, if it is less than five years you will lose 3 months’ worth of interest. After the five years you can cash them in and not lose any interest. The maturity date is thirty years from date of purchase.


You buy the EE bonds for yourself; they are not transferable by selling. You are able to buy them for others as gifts but you will need to have their social security number to buy them. You have to hold them for a period of five days in your gift section on your Treasury direct account before you are allowed to transfer them over to the person receiving the gift. They will need to have a Treasury direct account too so they are able to receive your gift.

The minimum amount that you are able to invest at any one time is $25 and the maximum that you can purchase each year is $10,000. But at the start of a new year you are able to purchase more if you want.


The main differences between the EE bond and the i-saving-bonds is the way that the interest is calculated. The EE bond has a fixed rate and this is issued at the point of purchase but the I savings bond the interest is divided into two parts, the fixed rate which is issued at point of purchase, and the inflation rate. The inflation rate is calculated twice a year. It is still possible to purchase I savings bonds in paper format.

Therefore, it is important that you are able to work out which bond is going to be right for you. You need to keep the money tied up for at least a year, if you are looking at investing you should not be considering cashing investments in that time unless it is an emergency. Ideally you should have a full funded emergency account. An EE bond might be the bond to grow money for you.


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