savings bond

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Related to United States Savings Bonds: E Bonds, Series E Savings Bonds

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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
References in periodicals archive ?
Subject to certain limitations and phaseout rules, interest on qualified United States savings bonds may be excluded from gross income to the extent that the proceeds are used to pay qualified higher education expenses during the taxable year in which the redemption occurs.
Qualified United States savings bonds are any United States savings bonds issued (i) after 1989, (ii) to an individual who has attained age 24 before the date of issuance.
The rules allowing the exclusion of interest on qualified United States savings bonds are coordinated with the Hope and Lifetime Learning Credits (see Q 7546).

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