Government bonds offer investors a low-risk option for their portfolios. Bonds represent government borrowing from the public to fund many types of spending. Investors can buy bonds from banks for as little as $25 to several million dollars depending on the type of bond.
Series I and EE Bonds
As of 2010, the federal government offers Series EE and Series I bonds. Each bond has a different rate of return. Both can be purchased through banks. Treasury sells Series EE bonds for one-half of face value and Series I bonds at full face value. Series EE bonds are sold in specific denominations ranging from $50 to $10,000; Series I bonds are sold in denominations ranging from $50 to $5,000. Bond transactions require the use of a Social Security number and an individual investor may only buy $5,000 worth of each type per calendar year, though bonds purchased as gifts do not count toward the limit. Treasury also directly sells bonds online, allowing investors to purchase an additional $5,000 of each type of bond.
Municipal bonds raise revenue for state and local government borrowing. Some banks offer municipal bonds to investors. Banks and other financial institutions sell municipal bonds in denominations of $5,000 with no upper limit.
Inquire about bank transaction fees before purchasing bonds. Some banks and credit unions offer the service for free, others charge transaction fees for selling bonds.
- U.S. Treasury: I and EE Savings Bond Comparison
- The Investment FAQ: Bonds - U.S. Savings Bonds
- Bank of America: Tax Advantaged Investments
- American Eagle Federal Credit Union: Convenience Services
- Senator Chuck Grassley: Build America Bonds Program Keeps Getting Richer for Wall Street, Harder on Taxpayers
- savings bonds image by Stephen VanHorn from Fotolia.com