Savings Bonds Come In Both EE & I Bonds, But What is The Difference?
We covered bonds previously in “What is Investing? Different Types of Investments!”
Let’s cover how Series EE & I Bonds are the same!
- EE & I Savings Bonds both can be used to pay for Higher Education and can be part or fully excluded from paying taxes.
- EE & I Savings Bonds both earn a fixed rate of interest from the purchase date and the interest compounds semiannually.
- EE & I Savings Bonds both cannot be sold for the first 12 months, if sold before 5 years you lose the last 3 months of interests and they both stop earning interest at 30 years.
- EE & I Savings Bonds both can be purchased to the penny amount between $25 – $10,000 with a maximum limit of $10,000 per calendar year per social security number.
- EE & I Savings Bonds both can be purchased electronically.
- EE & I Savings Bonds both are taxed at the federal income tax level.
How are EE bonds Unique!
- EE Bonds earn a fixed rate from the time purchased for 20 years and may have a 1 time adjustment at 20 years.
- EE Bonds are only sold electronically and cannot be purchased in paper format any longer.
- EE Bonds are paid for initially at 1/2 the face value, if after 20 years it has not reached the face value it will automatically become it’s face value.
(Example $1,000 Face Value EE Bond is purchased, if .10% Interest it will reach $515.74 in 30 years. But with EE Bonds at 20 Years it will become $1,000 and will earn .10% for the next 10 years to a final value of $1,011.06)
How are I Bonds Unique!
- I Bonds earn a fixed rate from the time purchased for all 30 years, plus it has an adjusting inflation rate that adjusts semiannually per calendar year.
- I Bonds currently have a fixed rate of 0% and the inflation rate is 1.96% meaning if the inflation rate drops to 0% you will not earn any interest that year.
- I Bonds can return a better investment in between the 5-19 year period, but will NOT double at the 20 year mark making the EE bond usually come out on top after 30 years.
- I Bonds average interest can vary per year, my lowest average is 1.4% (Bought May 2004) and my highest is 3.25% (Sept 06).
Please check out the 3 part series below for more information!
Part 3 – Comparing EE & I Bonds – Detailed Graph & My Personnel EE & I Bond Experience.
I hope you enjoyed this article. If you liked this page, please share it with your friends on Facebook & Twitter. I want to know what’s on your mind and get ideas on how you are planning on investing in your future.
If You Have Never Checked Out My YouTube Channel Financial Investor, Stop By & Visit!
Follow Along As I Track My Stock Market Journey, All While Providing Financial Information To Be Financially Set!
Thanks For Your support,
Please Read Our Policy & Disclaimer.