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Save it for a Rainy Day  
Taking advantage of Savings Bonds


Save it for a Rainy Day
Taking advantage of Savings Bonds

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Gerber Life Family Times Archive

FinancialThe birth of a new baby and annual birthday celebrations are great gift-giving occasions. Clothes, booties, plush animals, and toys all find a welcome place when a little one is involved. But over time, the clothes are outgrown, the stuffed animals lose their appeal, and toys wear out and break. The next time you're stumped for a gift idea for your own child or someone else's child, consider giving a gift that appreciates and lasts far longer than a pair of shoes—a U.S. Savings Bond.

Although many people have probably grown up hearing the term "savings bond," they still may not be certain of what it is. According to the United States Securities and Exchange Commission (SEC), savings bonds are classified as "debt securities" by the U.S. Department of the Treasury and are issued to pay for the U.S. government's borrowing needs. They are considered one of the safest investments possible since they are backed by the "full faith and credit of the U.S. government." The U.S. Department of the Treasury adds that savings bonds became popular during the early 20th Century as the government issued "Liberty Bonds" to help finance WWI and Series E bonds to raise funds during WWII. In a similar manner, the Department of the Treasury issued the Series EE "Patriot Bond" on December 11, 2001 on the three-month anniversary of the September 11th terrorist attacks. Funds raised from the sale of the Patriot Bond help finance the government's global war on terrorism.

The Treasury Department's Bureau of Public Debt states that approximately 55 million people currently own savings bonds. They can be purchased by anyone who has a Social Security Number and is a resident of the United States (as well as U.S. citizens living in another country and those from other countries who work in the United States.) The SEC describes the three types of U.S. savings bonds available as follows:

  • Series EE Bonds replaced the Series E "war bonds." They are purchased at a discount of half of their face value in $50 to $10,000 dollar denominations. You cannot buy more than $30,000 (face value) in any calendar year. EE bonds increase in value as the interest accumulates (accrues) and they pay interest for 30 years. When EE bonds come due or mature, you are paid your original investment plus all of the interest.
  • Series HH bonds can only be purchased in exchange for Series EE or E bonds, Savings Notes, or with the proceeds from a matured HH bond. They are purchased at their full face value in denominations of $500 to $10,000. There is no limit on the amount you can purchase. Unlike Series EE bonds, they do not increase in value and reach maturity at 20 years.
  • Series I bonds are also sold at face value and grow with inflation-indexed earnings for up to 30 years. They are available in $50 to $10,000 denominations and, like Series EE bonds, the individual purchase limit is $30,000 in each calendar year.

FinancialSavings bonds can be purchased in either traditional paper form or in electronic form. Paper savings bonds are available at any financial institution and electronic bonds are available online through the U.S. Department of the Treasury's Treasury Direct. Savings bonds are great for baby or birthday gifts since picking a correct size or color isn't an issue. Savings bonds are an investment in the future that can be used toward a first car, education expenses, or a first home purchase as the child takes his or her first steps into adulthood.

When giving savings bonds as a gift, be aware that you will need the recipient's full name and Social Security Number or taxpayer identification number. With paper bonds, Treasury Direct suggests allowing three weeks for the actual paper bond to arrive—so plan accordingly. If you open a Treasury Direct online account (and the recipient has one also), you may purchase gift bonds online and have them sent to the recipient's account or transfer them from your own account. When the bond is delivered to the recipient's account, Treasury Direct sends an email announcing the gift. So for those who have trouble deciding on a gift idea, savings bonds present a "one size fits all" option that never goes out of style. Since they are registered with the U.S. Treasury's Bureau of Public Debt, savings bonds can be easily replaced if they are lost, stolen, or destroyed. With savings bonds, your gift will continue to grow along with the child!

Bureau of the Public Debt—
United States Department of the Treasure—
U.S. Securities and Exchange Commission—

Articles are provided for the general interest of our readers. Gerber Life Insurance is not responsible for any content and recommends that you consult the appropriate professional with any questions or concerns you may have concerning any financial or health related issues.

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