Bonds can be an important part of having a diverse investment portfolio. They provide a modest return with little risk. Treasury bonds are backed by the United States government, which can make them a less risky investment compared to stocks. Bonds have a face value that is the minimum amount that must be paid once they mature. However, their actual value may be more. Otherwise, you can cash out a bond early and receive the interest it gained. Learn more about bonds as investments below.
What Is a Series EE Savings Bond?
Series EE savings bonds are a type of bond issued by the United States Treasury for citizens and investors to purchase. Series EE bonds are similar to other bonds in that they have a face value that states the amount they’re worth at maturity. The maturity of Series EE bonds can be either 20 or 30 years, depending on what the investor chooses at the time of purchase.
Series EE bonds have an interest rate set by the Treasury, and investors agree to the terms when they purchase a bond. Comparatively, the Treasury also offers a Series I bond, which includes a variable interest rate. The rate of inflation determines the interest rates for the Series I bonds. Depending on changes in inflation, these could be an effective or ineffective investment.
Prior to 2005, Series EE bonds also used variable rates, which can be confusing to some who purchased bonds before 2005. Also, if you purchased your bonds between 2001 and 2011, you may be wondering why the term Patriot Bond is printed on the front of your paper bond. This is just a stamping that was added to Series EE bonds for this time period, but it does not affect the bond’s value.
Is a Series EE Bond a Good Investment?
Series EE bonds may be a good investment, depending on your expectations. Treasury bonds are relatively safe investments because they are backed by the federal government, and, barring something catastrophic happening, there is little fear of default. However, bonds are not a get-rich-quick scheme. While they are safe to purchase, they do not provide very high returns.
The main reason to choose a Treasury bond over other forms of investing is its safety. Not only do you not have to worry about not getting your investment back, but Series EE bonds have a face value guaranteed to be paid out when a bond matures.
Although Treasury bonds such as the Series EE don’t have high returns compared to investments in the stock market, their secure nature makes them a potential addition to an investment portfolio. Because Series EE bonds are a long-term investment, they are also great gifts. Purchasing Treasury bonds for young children is a great way to give them a head start when they reach adulthood. They can also benefit from tax savings if they choose to use the bond money to further their education.
If you are planning on buying Treasury bonds such as Series EE bonds as a gift, you must purchase them in the name of the person you are buying them for. This is because Series EE bonds are non-transferable, so only the purchaser can cash them in. Also, remember that the person whose name is on them will receive a 1099-int after cashing them in and will be responsible for its gains.
How to Calculate Value of Series EE Savings Bonds
It is easy to find out the value of a Series EE savings bond. If the bond was issued electronically, you can log in to your account where you purchased the bond, and it will give you the current value. You will need your account number and password to view your Treasury Direct account. You will also need to log in to the email account you signed up with. When signing in, you will need to enter your account number, but after doing so, you will be prompted with two-factor authentication. This will send you an email with a code you must copy and paste into the passcode box on Treasury Direct.
Once that is complete, it will ask for your password, which will take you to your account. On your account, you can view all of the bonds you hold and their value. This is also how you can sell your Treasury bonds when you are ready.
However, if you have older Series EE paper bonds, you can find their value just as easily. The Treasury Department has a calculator that determines the value of your paper bonds. All you need is the series, denomination and issue date. The serial number will also allow you to save them for easier access later.
Series EE bonds issued between 1997 and 2005 have a variable interest rate that could change during the course of ownership. However, Series EE bonds purchased after 2005 have fixed interest rates set every six months to adjust for inflation.
How to Buy and Sell a Series EE Bond
Previously you could walk into a bank and buy Treasury bonds with ease. However, this practice stopped in 2012, and the only way to purchase these bonds now is online through Treasury Direct. While it is unfortunate that you can no longer go to a bank and receive a paper bond, the process is now much simpler. Plus, you can track all of your bonds with ease from an online account. This makes it easy to track your bond’s current value and consider your options for selling.
Treasury Direct is a website owned and operated by the United States Treasury, and all bond trading activity is conducted through this site. If you encounter another site promising to sell you Treasury bonds, it is most likely a scam.
You should also know that vintage Treasury bond certificates sold on sites like eBay may be a nice piece to hang up for display, but they hold no value because they are non-transferrable. The only time a Treasury bond would be transferred is if the original purchaser is deceased and you inherit the bond.If you still have paper bonds, you can ask your bank if they will cash them or mail them to the U.S. Treasury. There are also some rules surrounding when you can cash them in. For instance, you will have to wait at least 12 months after purchasing before you do so. Also, if you cash in a Series EE bond within the first five years, you will forfeit the previous three months’ worth of interest.
