Series EE savings bonds can provide you some very specific benefits when compared to other investments and even other types of bonds.
One of the most appealing features of Series EE savings bonds is the risk-free nature of them. When you invest in a Series EE savings bond, you are essentially investing in the United States government. You are buying from the US Treasury and receiving a guaranteed rate of return.
100 Percent Return
While it will take some time, you will essentially be able to double your investment by investing in a savings bond. When you buy a savings bond, you are buying it for half of the face value of the bond. For example, when you buy a $50 savings bond, you pay $25 for it. You will receive a schedule of returns for the bond, and if you hold it for a certain amount of time, you will be able to double your investment. It is a slow and steady way to get a return on your investment.
Another advantage of this type of savings bond is the method of taxation on the interest. Each year that you own the bond, you will earn a certain amount of interest. With these savings bonds, you will have the choice of when you report the interest on your tax return. You can report the small interest payout every year if you want and pay the taxes a bit at a time. Or if you prefer, you can pay all of the tax on the interest when you cash in the bond at its maturity. Many people opt to do the latter because you cannot actually get any tangible income from a bond until you cash it in. It is always difficult to pay taxes on something for which you are not getting paid.
Another big advantage of buying savings bonds is that you can use them to fund educational expenses. When you cash savings bonds in to fund college expenses for a child, you do not have to pay taxes on the interest that you earned. This allows you to control your college savings and earn a steady rate of return. You will be able to tell exactly how much you will make over the life of the investment, and then you will not be hit with taxes upon payout.