Governments issue from time to time savings bonds in order to attract funds from investors and use them for what is needed. Actually, this is a way through which the investors are lending money to the government. They may be paper bonds or electronic bonds, but either way, they can be redeemed after one year. The interest for saving bonds is reported only when the bonds are cashed and no dividends can be acquired through them. The only gain is the interest payment added to the value of the bond.
There are several types of bonds issued by the government and each of them has different values. The treasury of the United States has been issuing bonds starting from 1935, beginning with the series A and continuing with B, C, D, E, EE, F, G, H, HH, I, J and K. Some of them lasted for only of year, but others ran for years, like series E that started in 1941 and was issued until 1980.
Let’s take, for instance, series EE, that had begun in 1980 and that can be bought at half of the full face value. Some of them can be cashed after eight or even thirty years and they can be bought at prices varying from 50-10,000 dollars. There are some penalties taken from the interest in some conditions. If you decide to cash in the bond before the fifth year, three month of interest are taken from the whole sum. You may have heard of the series EE as the Patriot Bond and they can be sold by banks and financial institutions. Savings bonds were also offered in the series F, G, H, HH, I, J and K.
What Is The Value?
In order to calculate the value for the interest gained on a saving bond, there are several things to be kept in mind: the face value of the bond, the interest rate up till the moment of speaking and the possible penalties that are to be taken from the total. Another thing: when a bond is issued at half the face value, you can receive the full face value only after it reaches its maturity, while the bond issued at the face value has twice the original value at the maturity age. You can earn extra cash if you wait for receiving the value of the saving bond after the maturity date. With each year that passes after the maturity date, your interest will be higher.
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