How to Make Money in U.S. Savings Bonds

U.S. savings bonds are low-risk loans an individual makes to the government over a fixed period of time. They are an excellent way for many Americans to make money and simultaneously lend financial support to the country as well. You can maximize your investment by understanding how U.S. savings bonds work and how to get the most value out of them.

Instructions

Difficulty: Moderately Easy

Things You’ll Need:

• U.S. savings bonds

1. Choose which type of U.S. savings bonds in which you would like to invest. EE type bonds have a fixed rate of interest over 30 years, while I-series bonds combine that same fixed rate with an additional rate that is adjusted for inflation every 6 months.
2. Keep track of the U.S. savings bonds you have purchased, and redeem them as soon as they stop earning interest. If you wish to keep the money invested in a savings-bond program, simply reinvest them at this time.
3. Spread the schedule for redeeming U.S. savings bonds over several years, instead of cashing them during concentrated periods of time. This will help you to avoid being lifted into a higher tax bracket, which can detract from your investment.
4. Let your savings bonds mature for the maximum amount of their terms if possible. While you can cash in your savings bonds after you've had them for 12 months, the interest is compounded monthly, so the rate at which you will make money will increase with time until the bonds mature.
5. Use the Treasury Direct website of the U.S. Treasury Department to monitor the value of your savings bonds (see Resources below). This website will also allow you to see the inflation rates that affect the I-series bonds, so that you can determine if it's more profitable to switch to a fixed rate EE bond.

Tips & Warnings

• Use your earnings from redeeming your savings bond on higher education expenses, such as college tuition. This way, you will be able to avoid paying taxes on your interest earnings on the bond.
• There are billions of dollars invested in U.S. savings bonds that are no longer earning interest. Since the Treasury Department does not send any type of financial statement to bond purchasers, it's important to keep track of when your bonds mature and/or no longer earn interest.