US Savings Bonds - The Types Of US Saving Bonds You Must Know About

Despite the one-notch downgrade in credit rating for the United States by Standard & Poor's, the US savings bonds are still considered one of the lowest-risk investments in the market. Said downgrade was the first time since the 1920s when the United States was given the sterling AAA rating so it was only understandable that investors were initially jittery over the prospect of non-payment on their bonds especially in light of the many fiscal troubles that the federal government is going through.

But, as can be expected, the investors eventually saw reason. Savings bonds are still good investments because of the very low possibility of default on the principal and interest payments. The federal government still has the capacity and the willingness to pay its issued US savings bonds.

With that being said, you should look into savings bonds are your next investments. You will be diversifying your investment portfolio and we know how important diversification is for your financial status. Here are the types of savings bonds issued by the US Department of Treasury.

US Savings Bonds - EE Series

These US savings bonds come in affordable denominations ranging from as low as $50, $75, $100, $200 and $500 to as high as $1,000, $5,000 and $10,000. You will be purchasing these savings bonds at half of their par values while the interests accrue over the course of their maturity period, which can last up to 30 years.

It must be noted that these US savings bonds are not transferable to another person's name and, thus, are popular gifts for children. For example, you want to give your kids EE savings bonds as gifts to start their investment portfolio. But remember that if you want to cash in on the bonds, the proceeds will be deducted of a somewhat substantial penalty.

US Savings Bonds - E Series

Also known as War Bonds, the E savings bonds were first issued in May 1941 with the EE bonds replacing them in January 1980. As such, the E bonds were the longest-running bonds in American history.

You can purchase E savings bonds in denominations from $25 to $10,000. Just like their predecessor, these US savings bonds are non-transferable. You can purchase them at 75% of their face values with a guaranteed minimum yield of 4%, which is compounded in a semi-annual basis but only for bonds with a maturity period after 1 March 1993. For bonds purchased between the years 1941 to 1965, the interest rate is carried up to 40 years.

US I Savings Bonds

The US I savings bonds are new in the market with the first issuance dating back to 1998 only. It should be noted that these savings bonds were issued as a form of protection for investors against the effects of inflation. This is achieved by setting a unique interest rate based on both the inflation rate and a fixed interest rate, the latter of which is set by the government twice a year.

Unlike the EE and E savings bonds, the "I" savings bonds are sold at face value. Interest is accrued monthly with compound interests for up to 30 years although the minimum period for holding is just 12 months.

So, which of these US savings bonds are for you? You decide, of course.