How Do I-Bonds Work?

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I-bonds are issued by the government, and they are usually issued for protection against inflation. Learn about an explanation of I-bonds on the U.S. Treasury's Web site with help from a licensed financial planner in this free video on bonds and investing.

Part of the Video Series: Bond Investing
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Video Transcript

My name is Bill Rae. I'm with Alumni Financial Services. I've been in the business and the finance world for well over twenty years, and the question is how do I bonds work? Well first of all, a bond in the finance world is a debt security in which an authorized issuer owes a debt to you, the borrower if you will. In other words, they're borrowing money, and they agree to pay you an interest rate over a certain period of time. Now I bonds are issued directly from the U.S. government. In fact, they have an excellent website, Not only will they give you a good explanation of the I bonds, but they'll help you actually purchase em' directly through the website, so I urge you to visit them. The bonds, again, are issued by the U.S. government, and they're generally issued for inflationary protection if you will. Simply, like all bonds it's borrowing money and paying you back an interest rate under a certain time frame, and at that time when it's up, it's called maturing, you get your money back. Excellent vehicle, but again, we urge you sit down with a licensed professional. When you're lookin' to do investments you need to talk with someone who is licensed and knows what they're doing. That's our advice. My name is Bill Rae. I'm with Alumni Financial Services, and we're here to help you build wealth.


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