As of today, U.S. savings bonds have gone digital. Paper savings bonds are history.
I’m get a bit nostalgic when it comes to paper bonds. There’s just something comforting in holding physical evidence of your investment. And the designs of paper bonds over the years have been quite impressive. So before we get to how and where to buy electronic U.S. Savings Bonds, here are a few bonds for the memory books:
Treasury Direct has put together a great looking timeline of the history of the U.S. Savings Bond worth checking out.
How to Buy Electronic Savings Bonds
The place to buy U.S. Savings Bonds is TreasuryDirect.gov. You can open an account online in minutes (online application page). With a Treasury Direct account, you can invest in the following:
- Treasury Bills: Short term U.S. debt with terms of 4, 13, 26 or 52-weeks. Bills are sold at a discount from the face value. At the end of the term, an investor receives the face value.
- Treasury Notes: Also called T-notes, they are issued in terms of 2, 3, 5, 7, and 10 years. T-notes pay interest every six months until they mature. Notes can be auctioned at, above, or below face value.
- Treasury Bonds: All bonds have 30-year terms, pay interest every six months, and return the face value of the bond at maturity.
- TIPS: Treasury Inflation-Protected Securities adjust with the Consumer Price Index. When the CPI rises with inflation, the principal of a TIPS increases. When the CPI drops, the principal decreases.
- EE Bonds: As Treasury Direct describes, EE bonds are “low-risk government-backed savings products that you can use toward financing education, supplemental retirement income, birthday and graduation gifts, and other special events.”
- I Bonds: Like TIPS, I Bonds protect against inflation by indexing a portion of the interest rate to CPI. There are also some tax advantages to I Bonds over TIPS.
There are several ways to purchase bonds from Treasury Direct. Of course, once you create an account you can begin investing. But Treasury Direct offers several purchasing options you may not know about.
SmartExchange: If you own paper bonds and want to exchange them for an electronic bond, Treasury Direct offers SmartExchange.
Payroll Savings Plan: You can set up direct deposit from your employer. Called the Payroll Savings Plan, you can have a set amount of money directed to your Treasury Direct account for automatic investing.
Gifts: You can buy bonds as gifts through Treasury Direct (details here). Treasury Direct will keep a record of all of your gift purchases, and they offer gift certificates so you have something to actually give as a gift.
Minor Linked Accounts: If you want to buy bonds for your children, grandchildren, or other minors, you can create a minor linked account.