With U.S. Savings Bonds, consumers and businesses can receive a guaranteed interest rate on their savings. These bonds help fund federal spending with terms of up to 30 years. The U.S. government currently issues two types of savings bonds–Series EE and Series I–that can be bought online through its Treasury Direct website. Although there are only two types of U.S. Savings Bonds, their uses can be quite flexible and each one can be an ideal investment in certain situations. To determine the best U.S. Savings Bonds for a variety of situations, we analyzed the benefits of each type of savings bond, their interest rates, maturities, and other relevant factors. The best savings bonds are easy to purchase, offer attractive interest rates, and include tax benefits on the interest they earn. Why We Chose It Series I Savings Bonds are the best overall because their earnings adjust with inflation, come in both paper and electronic forms, and may avoid Federal taxation when used to pay for education. Pros & Cons Pros Interest rate adjusts every six months based on inflation Can purchase electronic or paper bonds Earnings exempt from state income tax May avoid Federal taxes when used for education Can purchase for as low as $25 Cons Must own for one year before selling Lose three months' of interest if sold before five years Interest rates are not guaranteed Maximum purchase of $10,000 per year of electronic bonds and $5,000 of paper bonds May only buy paper bonds with a Federal tax refund Overview Series I Savings Bonds are our choice for the best U.S. savings bonds because they offer a higher return that adjusts with inflation, can be delivered electronically or in paper form, and may avoid Federal taxation when used to pay for higher education. Series I Savings Bonds are also the best choice for education savings because of the tax break when paying for college and inflation adjustment. Bondholders will continue to earn interest for up to 30 years or until the bond is cashed in, whichever comes first. The current rate is 6.89% for bonds issued between November 2022 and April 2023. Interest rates are a combination of a fixed rate plus a semi-annual inflation rate that adjusts every six months. These bonds can be purchased for as little as $25, with a maximum of up to $10,000 per calendar year per Social Security Number. Electronic bonds have a minimum purchase of $25 and a maximum of $10,000 with denominations of any amount in between in penny increments. Paper bonds start at $50 each, come in denominations of $50, $100, $200, $500, and $1,000, and have a maximum purchase amount of $5,000 per year. Electronic savings bonds can be purchased at any time through Treasury Direct, while paper bonds are only available with your IRS tax refund. Series I Savings Bonds must be held for at least one year before they can be redeemed. These bonds are known as zero-coupon bonds, which means that they do not receive regular interest payments. The interest accrues and is paid out when the bond is cashed. If you redeem them during the first five years, you'll forfeit the interest earned from the previous three months. After five years, there is no penalty. Interest earned is taxable at the Federal level, however, it may be excluded when used to pay for education. Savings bonds are exempt from state and local income taxes but you may owe estate or inheritance taxes, depending on your personal circ*mstances. Why We Chose It Series EE Savings Bonds are the best gift, retirement planning, and for diversifying a portfolio because they provide a guaranteed rate of return and, even if interest rates are lower, the savings bond will be worth double its face value after 20 years. Pros & Cons Pros Fixed-rate of interest Worth double face value after 20 years Earnings exempt from state income tax May avoid Federal taxes when used for education Can purchase for as low as $25 Cons Must own for one year before cashing in Lose three months of interest if cashed in before five years Interest rates are lower than alternatives Maximum purchase of $10,000 per year Cannot buy paper savings bonds Overview Series EE Savings Bonds are the best savings bonds for gifts, retirement planning, and diversifying a portfolio. These bonds are available in any amount to the penny ranging from $25 to $10,000 with a maximum purchase of $10,000 per year for each Social Security Number. Investors can purchase them directly through Treasury Direct on a one-off purchase or through regular recurring payroll deductions. Series EE Bonds are only available in electronic form. The interest rate on Series EE Savings Bonds varies depending on when they are purchased. The current interest rate is 2.10% (as of January 2023). The U.S. Treasury Department updates the rates on new bonds each May 1 and November 1. When you buy a saving bond, the rate is fixed until it reaches maturity 30 years later. Series EE Savings Bonds are a good choice for gifts, retirement planning, and diversification because they are guaranteed to double in value if held for at least 20 years. Even if the interest rate is low, the U.S. government will make a one-time adjustment to fulfill this guarantee. This guarantee provides assurances for investors who are planning for retirement or diversifying their portfolios with less risky assets. You cannot sell a Series EE Savings Bond until you have held it for at least one year. After that, it is completely liquid and can be cashed at any time. If you redeem the savings bond during the first five years, there is a penalty of three months' interest. After five years, there are no more penalties. Interest earned on these savings bonds can be reported yearly or all at once when the bonded is cashed in and the money is received. Investors pay federal income taxes on the earnings, but they are exempt from state and local taxes. The earnings may avoid federal taxes when used to pay for higher education expenses. Best Savings Bonds Best Savings Bonds Final Verdict Compare Providers How to Choose Savings Bonds vs. CD The Best Time to Cash Savings Bonds Are Savings Bonds a Good Investment? How Much Do Savings Bonds Cost? Methodology Our choice for the best savings bond is the Series I Savings Bond. It offers a more competitive rate of interest that adjusts with inflation and you can purchase both digital or paper versions of the bond. The interest rate adjusts every six months, which allows investors to benefit from rising inflation rates and avoid locking in a low, fixed rate when interest rates are below historical averages. You can buy digital Series I Savings Bonds in any denomination above $25 with a maximum of $10,000 per year for electronic bonds, so they are a good fit for anyone's budget. When choosing the best savings bonds for your situation, it helps to know what features are most important to you. Series I and Series EE Savings Bonds have many similarities, but there are a few key differences that can impact your decision. Savings Bonds and CDs are both popular choices for risk-averse investors. They have a lot of similarities in that they are easy to purchase and offer interest rates that are fixed for periods of time. For short-term investors of less than one year, CDs are the better choice. You cannot cash out a savings bond until you've owned it for one year. Most banks offer CDs with a variety of terms that typically range from one month to five years. There are many advantages to savings bonds though. You can purchase a savings bond today and allow it to grow for the next 30 years without worrying about what the interest rates are when your CD matures. Additionally, savings bonds offer tax advantages that CDs do not. Your interest earnings are not subject to state or local income taxes and may be exempt from Federal income taxes when used to pay for education expenses. Currently, Series I Savings Bonds also offer rates that are substantially higher than most short-term CDs. Investors can take advantage of these higher rates and have full liquidity after just one year. While there is a three-month interest penalty if you redeem a savings bond in the first five years, many longer-term CDs have interest penalties that have higher penalties. The best time to cash savings bonds is after holding them for at least five years. You cannot sell them until after you've held them for one year, and if you sell before five years, you'll owe three month's interest as a penalty. Ideally, Series EE Savings Bonds should be held for at least 20 years in order to benefit from the guarantee that they'll be worth double their face value. It depends, savings bonds can be a good addition to your portfolio for retirement. However, the interest rates tend to be low because of their government guarantees. Other investments, such as stocks, tend to outperform savings bonds over time. Investors who are looking to balance out their portfolio, reduce risk, and add guaranteed rates of return can consider adding savings bonds to their portfolios. Savings bonds are sold at face value with minimum values starting at just $25. They can be purchased in any amount to the penny above $25, including specific dollar and cents amounts, such as $25.63. The maximum savings bond face value is $10,000. To pick the best savings bonds, we analyzed the savings bonds currently offered by the U.S. Treasury Department. At this time, only two savings bonds are available for purchase, so we compared the bonds against each other. We gathered data about purchase methods,minimum purchase amounts, interest rates, penalties, maturities, taxation, and other features to determine which savings bond is best for a variety of uses. Article Sources Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in oureditorial policy.Best Overall & Education Planning : Series I Savings Bonds
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Best Gift & Retirement Planning : Series EE Savings Bonds
Final Verdict
Compare the Best Savings Bonds
Company Type of Savings Bond Interest Rate No. of Years Minimum Purchase Maximum Purchase per year U.S. Treasury Series EE 2.10% (January 2023) fixed Updated every 6 months Guaranteed to double in value after 20 years Up to 30 years $25 $10,000 U.S. Treasury Series I 6.89% (January 2023) variable Updated every 6 months Up to 30 years $25 electronic; $50 paper $10,000 electronic; $5,000 paper How to Choose the Best Savings Bonds
Savings Bonds vs. Certificates of Deposits (CDs)
When Is the Best Time to Cash Savings Bonds?
Are Savings Bonds a Good Investment for Retirement?
How Much Do Savings Bonds Cost?
How We Chose the Best Savings Bonds
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How to Give Bonds as a Gift U.S. Savings Bonds vs. CDs: What’s the Difference? Great Financial Gifts for Kids for the Holidays Still Have I Bonds? March 1 Is a Smart Time to Swap Them for a CD Do CDs Make Sense in a Rising Inflation Environment? U.S. Savings Bonds Series EE vs. Series I: Knowing the Difference
FAQs
Are I-bonds a good investment in 2024? ›
You would know, with your I Bond, that if you purchase in April 2024 you will get at least 1.3% above inflation. That fixed rate, giving you a return above inflation, is the big value in I Bonds right now.
What is the safest investment with the highest return? ›Here are the best low-risk investments in April 2024:
- High-yield savings accounts.
- Money market funds.
- Short-term certificates of deposit.
- Series I savings bonds.
- Treasury bills, notes, bonds and TIPS.
- Corporate bonds.
- Dividend-paying stocks.
- Preferred stocks.
Apr 1, 2024
Rate for Existing I Bonds Will Drop About 1 Percentage Point
| Bond Issue Date | APY for Months 1–6 | APY for Months 7–12 |
|---|---|---|
| Nov 2023–Apr 2024 | 5.27% | 4.26% (est) |
| May 2023–Oct 2023 | 4.30% | 4.86% |
| Nov 2022–Apr 2023 | 6.89% | 3.79% |
| May 2022–Oct 2022 | 9.62% | 6.48% |
Apr 11, 2024
The benefits of investing in I bonds
Suze Orman has long been a fan of these unique savings bonds because they offer so many benefits over other types of investments. For starters, they offer a guaranteed return on your investment, unlike stocks or mutual funds, which may go up or down over time.
Our picks at a glance
| Rank | Fund | Yield |
|---|---|---|
| 1 | Vanguard High-Yield Corporate Fund Investor Shares (VWEHX) | 6.40% |
| 2 | T. Rowe Price High Yield Fund (PRHYX) | 7.02% |
| 3 | PGIM High Yield Fund Class A (PBHAX) | 7.22% |
| 4 | Fidelity Capital & Income Fund (fa*gIX) | 6.16% |
Mar 15, 2024
The composite rate for I bonds issued from November 2023 through April 2024 is 5.27%.
What is the safest and best way to invest $100000? ›Best Investments for Your $100,000
- Index Funds, Mutual Funds and ETFs. If you're looking to invest, there are a lot of options. ...
- Individual Company Stocks. ...
- Real Estate. ...
- Savings Accounts, MMAs and CDs. ...
- Pay Down Your Debt. ...
- Create an Emergency Fund. ...
- Account for the Capital Gains Tax. ...
- Employ Diversification in Your Portfolio.
Dec 14, 2023
If you're 70, you'd look at sticking to 40% stocks. Of course, there's wiggle room with this formula, and it's really just a way to get started. And for many older investors, a 50-50 split of stocks and bonds is what's preferred throughout retirement, and that's fine, too.
Where can I get 10 percent return on investment? ›Summary of the best investments with 10% ROI
- Private credit.
- Individual stocks.
- Real estate.
- Fine art.
- Debt.
- A business.
- Private startups.
- Cryptocurrencies.
Jan 4, 2024
How to get the most value from your savings bonds
| Face Value | Purchase Amount | 20-Year Value (Purchased May 2000) |
|---|---|---|
| $50 Bond | $100 | $109.52 |
| $100 Bond | $200 | $219.04 |
| $500 Bond | $400 | $547.60 |
| $1,000 Bond | $800 | $1,095.20 |
What is a better investment than I bonds? ›
TIPS offer greater liquidity and the higher yearly limit allows you to stash far more cash in TIPS than I-bonds.
Is there a downside to I bonds? ›The cons of investing in I-bonds
There's actually a limit on how much you can invest in I-bonds per year. The annual maximum in purchases is $10,000 worth of electronic I-bonds, although in some cases, you may be able to purchase an additional $5,000 worth of paper I-bonds using your tax refund.
With bonds down about 2% year to date as measured by key indexes, Buffett's approach is looking pretty good so far in 2024. On a personal level, Buffett isn't a fan of bonds either. He has about 99% of his wealth in one stock—Berkshire Hathaway.
Should I invest in bonds or T bills? ›Both Treasury bonds and Treasury bills are low-risk debt securities issued by the federal government. T-bonds are designed for long-term investing, while T-bills have much shorter maturity periods. Both can help diversify your investment portfolio while shielding you from state and local taxes.
Which bond is the most profitable? ›Top 8 Bonds to Invest In for the Long Term
| Name | Ticker | Yield |
|---|---|---|
| 10-Year Treasury Note | (ICE:^TNX) | 4.2% |
| I Savings Bonds | N/A | 5.3% |
| iShares TIPS Bond ETF | (NYSEMKT:TIP) | 5.7% |
| Nuveen High-Yield Municipal Bond Fund | (NASDAQ:NHRMX) | 5.0% |
Waiting for the Fed to cut rates before considering longer term bonds isn't our preferred approach. The bond market is forward-looking and long-term Treasury yields typically decline once investors believe that rate cuts are coming.
How long should you hold Series I bonds? ›You can cash in (redeem) your I bond after 12 months. However, if you cash in the bond in less than 5 years, you lose the last 3 months of interest. For example, if you cash in the bond after 18 months, you get the first 15 months of interest.