I have a silly question,What is saving bond? is is like open a saving account?how come people don't just?

Question

put the money in the bank insteal buy the saving bond and put it away?what is the safe way to saving money insteal buy stock.I am new in this country.Help.Thank

Answer 1

Savings bonds are usually issued by the government. They typically have a certain value, ie: you pay $25 for a $50 bond. The rate at which they mature is sometimes fixed, sometimes depending on the bond index. Some bonds stop gaining value when they mature, some don't.

The reason they are better than savings accounts is that the interest rate is higher than most typical savings accounts. However the money cannot be taken out whenever you'd like, so that is the drawback.

Most savings bonds take a long time to mature, they don't make very good investments. They are good for gifts, especially for young children who don't need the money right away.

Better investment options are online savings accounts like ING Direct that pay quadruple what a regular bank does. Or mutual funds which incorporate a large number of stocks and are therefore safer from fluctuations in the market.

Answer 2

A savings bond is one way the govt, uses to finance the federal deficit. Suppose you buy a bond at a sale rate of $30.00 and at maturity it would be worth $50.00 paid at about 5% interest. My figures are wrong, but you get the idea. You can put money in the bank in a certificate of deposit and have it federally protected up to $100,000. The current interest rate is nearing 5% compounded daily.

Answer 3

Here's a page with some more information about savings bonds:

http://financialplan.about.com/cs/investing/a/USSavingsBonds.htm?terms=company+guardian+loan

I would encourage you to learn and read more about investing. I'll list links below, but I believe you should start by saving in a free interest bearing bank account. Once you understand a little more, you can choose another investment.

http://moneycentral.msn.com/home.asp
http://finance.yahoo.com/