U.S. Savings Bonds

    

Even aspiring capitalists may want to know some basics about U.S. savings bonds.  Because the awful effects of inflation weighs heavy on capitalists and invstors' minds alike, there are times when clear advantage may be found in holding "series I" savings bonds.  The following advantages are specifically meant to be contrasted against what investor/taxpayers do not receive with bank savings accounts (including CDs).

1) Income Tax Advantages (click here for more on this topic):

• Taxes may be deferred indefinitely on interest earned for savings bonds. At the taxpayer’s option, federal income tax may be deferred indefinitely until the bond is redeemed (cashed).
 
• Additionally, U.S. savings bond interest is always exempt from state and local income taxes.
 
• Where qualified higher education expenses are paid in the same tax year as a savings bond is redeemed, interest earned is exempt from all income taxes.

2) Inflation-fighting Advantage:

• For the series I-Bond only, the debilitating and wealth-sapping effects of inflation are offset . . . which translates into the retention of future purchasing power.

Many people can purchase Savings Bonds directly through electronic deduction with their employers; and everyone can purchase through commercial bank teller windows or directly throught the U.S. Treasury’s electronic program.

For a fuller discussion of why tax and inflation advantages are so important, read the following related article.

 

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