For Students: Make Money through Savings Bonds
- By:
- Catherine Brock | November 10, 2007
U.S. Savings Bonds earn money with little risk and little maintenance, an ideal option for the student saver.
You've heard that you need to have money to make money. That's usually true. But this isn't necessarily a bad thing, because making money with money is a lot easier than waiting on tables or manning a cash register. Using your savings to make money might mean less work and more of the other stuff, like studying, texting, and hanging out.
If you've parked your money in a free savings account at the bank, you're probably not that excited about the interest you're earning. A fraction of one percent on a thousand dollars doesn't add up to much. There are more profitable alternatives out there. One important one to consider is the U.S. Savings Bond.
When you purchase a savings bond, you're lending money to the U.S. government and earning interest in return. You pay out money to buy the bond and, upon redemption, you get your investment back, plus interest. Savings bonds are as safe as an FDIC-insured savings account, and may be even safer than that secret hiding place in your dorm room.
The two types of government savings bonds, Series EE and Series I, are both great options for student savings. The main difference between them is how the interest is calculated. Series EE bonds pay a fixed rate, and Series I bonds pay an inflation-adjusted rate.
You've heard that you need to have money to make money. That's usually true. But this isn't necessarily a bad thing, because making money with money is a lot easier than waiting on tables or manning a cash register. Using your savings to make money might mean less work and more of the other stuff, like studying, texting, and hanging out.
Low risk, low maintenance investment
If you've parked your money in a free savings account at the bank, you're probably not that excited about the interest you're earning. A fraction of one percent on a thousand dollars doesn't add up to much. There are more profitable alternatives out there. One important one to consider is the U.S. Savings Bond.
When you purchase a savings bond, you're lending money to the U.S. government and earning interest in return. You pay out money to buy the bond and, upon redemption, you get your investment back, plus interest. Savings bonds are as safe as an FDIC-insured savings account, and may be even safer than that secret hiding place in your dorm room.
The two types of government savings bonds, Series EE and Series I, are both great options for student savings. The main difference between them is how the interest is calculated. Series EE bonds pay a fixed rate, and Series I bonds pay an inflation-adjusted rate.
For you or as gifts
You can buy savings bonds online at TreasuryDirect (www.savingsbonds.gov), or at your bank or credit union. Take note of the differences between buying bonds online and buying them at a bank or credit union branch:
- Bonds purchased through TreasuryDirect are electronic. You can open an account with as little as $25. These are purchased for face value and are available in any denomination. The 24/7 online interface makes it easy to check a bond's value or to redeem it.
- Bonds purchased through banks and credit unions are paper. After the purchase, you'll receive a printed document that has to be protected like cash. These are available in certain denominations only. For example, you can buy a $50 paper bond and $100 paper bond, but not a $150 one. Series I paper bonds are purchased at face value, and Series EE paper bonds are purchased at half of face value. You can check your paper bond's value by using the TreasuryDirect Savings Bond Calculator. Paper bonds can be redeemed at banks and credit unions.
The next time that you have a little free time (not in class, please!), navigate that iPhone to www.savingsbonds.gov. Everything you need to know is there. If you can't spare any cash, ask for savings bonds for your next birthday. Your elders will probably love the idea.
6.13
