EE savings bonds are a type of investment vehicle that are issued and backed by the U.S. Treasury Department. EE savings bonds sold after 2005 offer a fixed rate of return to investors, while those sold before 2005 offer investors a variable rate of return based on the 5-year Treasury bill market rate. Savings bonds have long been seen by investors as a safe, reliable and low-risk investment option because the bonds are backed by the federal government.
EE savings bonds are a type of savings account for the investors that buy these products. The purpose for these savings vehicles are most commonly used to save for education costs, such as college, or for income to supplement retirement income during the golden years. Many EE savings bonds are purchased as gifts for birthdays, graduations and other special occasions as a means to help the child receiving the gift to save for college.
You can buy and manage EE savings bonds in one of two ways. You can establish an account with TreasuryDirect, which is the U.S. Treasury Department, which allows you to buy and manage your EE savings bonds online. The account also allows you to electronically redeem, or cash the bonds in, when the bond has matured. If you prefer to receive paper bonds, you can also buy paper EE savings bonds through the TreasuryDirect account. Instead of the bonds being held in your account at the Treasury, however, you will receive a paper bond in the mail.
Depending on whether you buy the EE savings bonds electronically or receive paper certificates, the EE savings bonds have some different features. Electronic EE savings bonds are sold at face value, so if you’re buying a $50 EE savings bond, then you’ll pay $50 for the bond. Electronic bonds are also paid face value when they are redeemed. Paper bonds, on the other hand, are sold at half the face value. Paper bonds are not eligible to be redeemed for the face value until the maturity date on the bond is met. The denominations the EE savings bonds are sold in also differ between electronic and paper bonds. Electronic bonds are sold in increments of $25, while paper bonds are sold at $50, $75, $100, $200, $500, $1,000 and $5,000 values.
The eligibility requirements as to who can buy and own EE savings bonds is flexible. Individuals, corporations, associations, public organizations, private organizations and fiduciaries are eligible to own EE savings bonds. As of 2009, TreasuryDirect accounts and owning electronic EE savings bonds opened up to individuals, trusts, estates, corporations, partnerships.
Anyone who has a Social Security number can own EE savings bonds. Residents of the United States, as well as U.S. citizens living abroad can own EE savings bonds as long as they have a U.S. address on record. EE savings bonds are one of the only types of securities that can be owned by minors, those younger than the age of 18.