January 2011

Savings bonds are issued by the U.S. federal government to an individual (either the purchaser or a designee) and grow at a set interest rate over time. The most common term length is twenty years. When a paper savings bond is purchased, half of the maturity value of it is paid and the rest is earned through interest. For example, a fifty dollar savings bond with a twenty year investment timeframe would cost twenty five dollars. It would not be worth its full value until it had matured. A paper savings bond looks like a cashier’s or traveler’s check and has the owner’s name on it as well as the date of maturity. If you purchase an electronic savings bond, you pay full face value and it is worth its full value when it is available for redemption.

This is the fourth of ten posts describing the key pillars of building a strong financial foundation. Read the introduction here. Check back each Monday for the next post in the series. Have you ever had to put an unanticipated, but necessary purchase on a credit card? Whether you got in a car accident, had [...]