I need a little clarification on the following statement from the TreasuryDirect website regarding the EE Bonds: "Paper Series EE Savings Bonds are sold at half face value. The Treasury Department guarantees that new issues of Series EE Bonds will double in value by 20 years from the issue date". Does this mean that if one were to purchase a paper bond, his/her original investment will at least quadruple? For instance, if I were to purchase a $100 EE bond and spend $50 (half face value), it will be worth $200 (double the bond's face value) at its maturity? Also, why are EE bonds sold at their face value on treasury direct? What's the catch in buying paper EE Bonds, which are sold at 50% discount? Thanks in advance.
2007-11-20 17:28:23 · 4 answers · asked by GG 2 in Business & Finance ➔ Investing
To answer your first question on the paper bonds they will be guaranteed to be at face value at year 20. If you buy a $100 bond at $50, then by year 20 it will be worth at least $100, thus double.
The electronic bonds are sold at a certain value, and gain interest based upon the amount purchased, the only reason that the paper bonds are sold at half price is mainly historical, since that is the way it has been done for a long time. The end result is the same, if you buy a $25 e-bond or a $50 paper bond, upfront cost is $25 and can be sold for at least $50 at year 20.
2007-11-20 21:13:56 · answer #1 · answered by Nicholas P 2 · 1⤊ 0⤋
EE bonds *used* to double. they do no longer from now on. With the costs of interest of the final 5 years soaring at a million-2%, an EE bond would be good fortune to double via the top of the 30 twelve months retaining era.
2016-11-12 06:56:01 · answer #2 · answered by ? 4 · 0⤊ 0⤋
EE bonds are sold at half the face value by convention. Beyond that, the face value is largely irrelevant. EE bonds will earn interest each year; when you redeem them, you will be paid the current value for each bond (The original amount you purchased them for plus the compounded interest).
2007-11-21 02:01:43 · answer #3 · answered by Anonymous · 0⤊ 0⤋
Not an answer to your question but.... One of the nice uses of E-Bonds and I-Bonds is that if you have an Allocation to Bonds that need to be shielded from immediate Tax implications. These investments wont carry a taxabe event until they are cashed.
The other is Municipal Bonds. So much for non essential drival.......... Good Luck Gerry
2007-11-21 03:09:59 · answer #4 · answered by tndiehard 2 · 0⤊ 0⤋