savings bond

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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.

Savings Bond

In the United States, a non-tradable bond issued by the federal government for savings purposes. A savings bond allows citizens to receive a guaranteed return for their investments and helps raise revenue for the government. There are two types of savings bond in the United States: Series EE and Series I, with the main difference being that Series I bonds have interest rates indexed to inflation. Savings bonds pay coupons semi-annually; they are sold at face value and pay par upon maturity, which is 30 years after purchase. Bonds not held for at least five years are subject to a redemption penalty. Federal taxes on interest are deferred until redemption or maturity. Savings bonds are non-transferable and must be either held or redeemed.

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
References in periodicals archive ?
The Treasury-related transactions are large: For example, the Federal Reserve Banks on average process about $476 billion per business day in privately owned, marketable Treasury securities transactions and handle $16 billion per year in sales and redemptions of U.S. savings bonds; and per average business day, they process about $6 billion in tax, fee, and loan receipts and about 4 million disbursements by check and wire.
Richmond, VA, April 30, 2010 --(PR.com)-- As part of its ongoing effort to reduce the number of auto accidents involving teens, Farm Bureau Insurance will award its 5,000th U.S. Savings Bond through its Teen Driver Safety Education Program.
* First Place - A $1,000 U.S. Savings Bond, a plaque, and an expense-paid trip for the student and a parent or guardian to Washington, D.C, to receive the prize.
Some 170 banks from 45 states hosted local levels of the competition and selected a winner to represent their bank and compete on the national level for a $3,000, $1,500 or $500 U.S. savings bond or an iPod Touch.
The Patriot's Pen Contest, for students in grades 6 through 8, requires a typewritten essay of between 300 and 400 words on the theme, "Does Patriotism Still Matter?" The top national winner will receive a $10,000 U.S. Savings Bond and an all-expenses-paid trip to Washington, D.C., for the winner and a guardian.
The grand-prize winner will receive a $500 U.S. savings bond, a Nintendo Wii video-game console, and a Mapman T-shirt.
The first-place winner will receive a $50,000 U.S. Savings Bond and the 2nd- through 10th-place winners will receive $1,000.
A $200 (first prize) and a $100 (second prize) U.S. savings bond will be awarded to winners chosen in four grade-level categories: grades 2 and 3, grades 4-5, grades 6-8, and grades 9-12.
Each of the three prizes consist of a U.S. Savings Bond in the following denominations:
* The U.S. savings bond interest exclusion is available for proceeds from such bonds contributed to a QSTR However, the beneficiary's adjusted basis in the proceeds equal the original purchase price;
Banks will host the local level of the competition and will select a winner to represent their bank and compete on the national level for a $3,000, $1,500 or $500 U.S. savings bond or an iPod [R] Touch.
For her outstanding work, Darice wins a $500 U.S. Savings Bond and a Nintendo Wii video console.