Back in the day, this was your grandmother's preferred birthday present to you. She'd pay $19 for a $25 savings bond that matured in a decade. And no, she never paid attention to the extremely low interest rate she was getting on her money.
Savings bonds are issued by the Treasury, and are a simple and cheap way of lending to Uncle Sam. There is no stated maturity date, but interest would be paid for a certain period. After that period ends, the bonds no longer pay interest. Also, interest isn't paid each year; instead, it's tacked on to the existing principal, so when you cash it in for college (or that '69 Barracuda), you receive the face value (they're usually sold with a $500 face value), plus all that accrued interest. And it ain't much.
Thanks, Grandma. You coulda bought a few shares of Exxon instead.
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Finance: What is a Savings Bond?2 Views
finance a la Shmoop what is a savings bond well it's kind of like charity
charity because interest rates on savings bonds are exceptionally low even
by government standards well there was an era in America when taxpayers happily
and willingly loaned money to Uncle Sam and were happy to do so because they had
great faith and trust that the people we elected were in fact decent honest [old government photos]
hard-working representatives who had the interests of the nation placed far ahead
of their own personal gain it was the era of Jimmy Stewart and a whole bunch [photo of Jimmy Stewart]
of others you should think the greatest generation yeah we know even a pretty [picture of John Wayne]
good generation check Congress for details so savings bonds used to be a
standard birthday present for young people kind of like the cross pin that [kid's birthday party]
nice Jewish boys would get at their bar mitzvahs grandmother's after slathering [boy's mar mitzvah]
in a bathtub of angry perfume loved handing the $50 savings bond envelope to [woman in hot bath]
their college-bound progeny well savings bonds are issued by the US
Treasury and have no stated maturity date instead what happens is that the
savings bond welljust pays the interest for some
period of time like say a decade and at the end of that 10 years while it simply
stops paying interest you can cash in the bond at that time or just let it
ride essentially renting money to the Gov for free and yeah you don't want to
confuse a savings bond with this bond yeah who needs no safety
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