Question: What Are Savings Bonds?
Answer: When most people talk about savings bonds, they mean the EE Series savings bond. These are like Treasury bonds for the individual investor. The good news is they can be bought with as little as $25, you will never lose your principle, and the interest rate earned is exempt from state and local income tax. The bad news is the interest rate doesn’t change for the life of the bond, so your return might not keep up with inflation, depending on the interest rate. Also, your money is tied up for five years, as there is a penalty if you redeem the bonds before that date. The easiest way to purchase them is via Treasury Direct.
