savings bond

Savings bond

A government bond issued in face value denominations from $50 to $10,000, with local and state tax-free interest and semiannually adjusted interest rates.

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savings bond

A nonmarketable security issued by the U.S. Treasury in relatively small denominations for individual investors. Three categories of bonds are available. Interest on these bonds is exempt from state and local, but not federal, taxation. Also called United States savings bond. See also Series EE savings bond, Series HH savings bond, Series I savings bond.

Do U.S. savings bonds have a place in a portfolio?

Probably not, at least for most serious investors. Higher yields are available in various other government obligations that also offer marketability with no penalties if you want your money. TIP: For a beginning investor or for individuals of modest means, U.S. savings bonds are often a better investment than certificates of deposit, because taxes are not due until the bonds are redeemed.

Thomas J. McAllister, CFP, McAllister Financial Planning, Carmel, IN