How to Buy Series I Bonds

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A Series I savings bond is issued by the government for any amount over $25, but a person must keep them for more than five years to avoid paying a penalty. Learn about why Series I bonds are exempt from income tax with help from a personal asset manager in this free video on the bond market and money management.

Part of the Video Series: Bond Market
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Video Transcript

Uncle Sam wants you. Oh no, not just you but, definitely your wallet. Because, once again, the U.S. government has spent more money than they've brought in. Sort of a perpetual teenager from what my house looks like anyway. The result is, that they need to fund that deficit. One of the ways that they do that is by issuing saving to bonds, and then making them attractive enough for you, the investor, to go and buy them. Why buy them, well they're guaranteed by the U.S. government, which means in the end, you're going to get your money back. You can invest any amount over $25.00, including pennies, in Series I savings bonds. But be careful, you can't get out in less than 12 months, and if you get out before five years, you're going to pay a penalty. So, they're not easy to exit, without paying a hefty penalty, in one way, shape, or form. They are exempt from income tax, at the state, and local level, like all treasuries are. And of course you have the guarantee of the U.S. government. Be careful though, as interest rates go up, in all likely hood, the value of bonds will go down. So be careful with interest rates at zero today, at some point, a year or two from now, they'll begin to go back up, and if you own longer bonds, you're going to get your head handed to you. I'm Roger Groh. Be careful. Thank you on behalf of Uncle Sam, and thank you for spending a few minutes with me.


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