Series EE & I Savings Bonds Basics

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 1: Series EE Bond Breakdown – Get Rich With Time!

Part 2: Series I Bond Breakdown – Yes I have Some!

Part 3 – Comparing EE & I Bonds – Detailed Graph & My Personnel EE & I Bond Experience.

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