Q and A: Savings Bonds for Kids
What are savings bonds?
Savings bonds, basically, are a form of lending money to the government. Common citizens buy these papers and the government pays an interest rate on this money. Therefore, they represent one of the safest ways of saving money there is. These bonds are sold in values of $50, $100, $200, and $500.
Why should I buy a savings bond?
As I said, they are very safe. Once bought, savings bonds are not allowed to be sold or bought — they will just sit and earn a lot of interest. 56 million people own government bonds currently.
How can I buy a savings bond? How much money can I make?
You can either do it through the internet or through a financial institution such as a bank. It all depends on how safe you feel using the internet.
There are two types of bonds: some will earn interest over 30 years (according to the changes in the interest rates throughout the period), while others will pay you the face value printed on the bill. In other words, it is up to you if you want to face a little more risk and see how much the interest rate will vary or if you want to know exactly how much money you will make when you redeem your bonds.
Who owns savings bonds?
That depends on how you choose to do things. For example, you can purchase a bond and designate your child as the beneficiary. Should anything happen, then the beneficiary owns the bond. If you choose to do things differently, though, you can have bonds belonging to two different owners. You can also define minors as savings bond owners as well.
Can I give savings bonds as a gift to kids? How?
Savings bonds for kids make a great gift. Although they may not be as cool as a videogame or a toy, they are very practical. Unlike the toys, instead of losing value throughout time they will actually earn it. It is also a valuable lesson about earning interest, something that can be complemented with online savings accounts for kids.
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