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Savings Bond in America - Essay Example

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Savings Bond in America

It can also be redeemed as early as one year after its purchase, making it a short-term investment. The bond holdings require no additional fees and "bond purchaser is not required to have a bank account to buy, hold, or redeem a bond and therefore is not subjected to the burdensome ChexSystem review" (Lopez-Fernandini).
There are two types of bonds with which small savers can choose: the Series I U.S. Savings Bond which was introduced in 1998 or the newer Series EE bond introduced in 1980. The two bond options are available at the Treasury Department, at financial institutions, internet banking system, through the payroll savings plan while and through select employers with valid social security number (Lopez-Fernandini). Currently, the Treasury Department issues 8 denominations for the paper EE bonds - $50, $75, $100, $200, $500, $1,000, $5,000, and $10,000 denominations. There is also an introduction of the electronic EE bonds which can "be bought in increments of one penny for $25 or more" (Treasury Direct). A purchase limit of $5000 worth of EE Bonds for each calendar year was set by the government (Treasury Direct).
"Savings bonds are backed by the full faith and credit of the United States government" (Vohwinkle). This makes U.S. Savings Bonds the safest investment. "The return on Series I bonds (5.64% in early 2009) is currently outpacing Treasury Bills, affirming bonds as a competitive and safe investment. ...Show more

Summary

A basic finance subject teaches that bonds are used primarily for capital formation. Large scale corporate investments need financing from both the equity and bond market (Mishkin). Both the public and the private sector are seen to rely on bond issue for this purpose…
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Savings Bond in America essay example
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