When to Purchase U.S. Savings Bonds So if the interest rates on bonds are falling consistently and sometimes even lag behind the rate of inflation, why would anyone be concerned with purchasing them?
When is a good time to add them to your financial portfolio? Remember that U.S. savings bonds are a safe investment in which you’ll never lose money. When you spend $500 on a bond, it will never be less than $500; unlike a CD or other investment purchase, the bond’s face value never decreases. And while the interest rates have been dropping steadily, keep in mind that they are still very competitive with other money market accounts which too have seen their interest rates falling. Also, there are certain tax advantages to purchasing U.S. savings bonds, specifically, you don’t pay state or local income tax on the interest your bonds earn. The interest compounds tax-deferred until you actually redeem the bonds. Also, if you use the bonds to pay costs for college, the interest could be tax exempt as well. U.S. savings bonds are a smart investment if they are used as part of an overall financial portfolio. They may still be viewed by some as being a fun gift to give to children, and indeed
