Savings Bonds: About — TreasuryDirect (2024)

FAQs

Are TreasuryDirect bonds a good investment? ›

Treasury securities are considered a safe and secure investment option because the full faith and credit of the U.S. government guarantees that interest and principal payments will be paid on time. Also, most Treasury securities are liquid, which means they can easily be sold for cash.

Securities purchased through TreasuryDirect cannot be sold in the secondary market before they mature. This lack of liquidity could be a disadvantage for investors who may need to access their investment capital before the securities' maturity.

The composite rate for I bonds issued from May 2024 through October 2024 is 4.28%.

After 20 years, the Patriot Bond is guaranteed to be worth at least face value. So a $50 Patriot Bond, which was bought for $25, will be worth at least $50 after 20 years. It can continue to accrue interest for as many as 10 more years after that.

Investing in Treasury bonds comes with some disadvantages as well. Some of the major downsides to Treasury bonds are: Lower yield: You'll typically earn less interest on Treasuries compared with other, riskier securities.

Cons of Buying I Bonds

I bonds are meant for longer-term investors. If you don't hold on to your I bond for a full year, you will not receive any interest. You must create an account at TreasuryDirect to buy I bonds; they cannot be purchased through your custodian, online investment account, or local bank.

You can lose money on a bond if you sell it before the maturity date for less than you paid or if the issuer defaults on their payments.

TreasuryDirect is free. There are no fees, no matter how much or how little you invest. You may hold both savings bonds and Treasury marketable securities in TreasuryDirect. Your securities in TreasuryDirect are electronic, so you don't have to worry about them getting lost, stolen, or damaged.

After 20 years, it doubled in value ($1,000) and continued to earn interest ($600) until reaching maturity after 30 years. If you redeem your bond today, you can redeem it for $1,600 and spend that on goods or services or reinvest that money in a new savings bond.

What is the difference between a savings bond and a Treasury bond? ›

Finally, savings bonds can't be traded or sold between individuals (no secondary market) and must be redeemed through the government itself. By comparison, Treasury bonds, municipal bonds, and corporate bonds are much more liquid; all three types can be traded on a secondary market before maturity.

Interest earned on I bonds is exempt from state and local tax but subject to federal tax. The interest is taxed in the year the bond is redeemed or reaches maturity, whichever comes first.

You can skip paying taxes on interest earned with Series EE and Series I savings bonds if you're using the money to pay for qualified higher education costs. That includes expenses you pay for yourself, your spouse or a qualified dependent. Only certain qualified higher education costs are covered, including: Tuition.

As one of the lowest-risk investments on the market, the 10-year Treasury and its yield are important for several reasons. First, investors use the 10-year Treasury as a baseline against which to compare the risks and rewards of other investments.

The Bottom Line

Series EE bonds are guaranteed to reach their face value after 20 years. Meanwhile, Series I bonds don't come with guarantees and mature after 30 years. Both bonds can also be cashed out at a cost after one year or penalty-free after five years. U.S. Department of Treasury.

About TreasuryDirect.gov

Your investments are backed by the full faith and credit of the United States government.

Since T-bills have fixed interest rates, inflation can erode the purchasing power of the returns earned from these investments. This means that investors may need help to keep up with inflation, resulting in a decline in real returns. T-bills are issued with maturities of only a few weeks to a few months.

Generally, yes, but that depends on your investing goals, your risk tolerance and your portfolio's makeup. With investing, in many cases, the higher the risk, the higher the potential return.

I bonds are a safe investment backed by the U.S. government that protects against inflation with a combination of fixed and variable interest rates. While I bonds offer tax advantages and low minimum investment amounts, they have downsides, including a penalty for early redemption and fixed rates that can be low.