Savings Bonds are an awesome long-term investment for kids. It teaches patience, and the value of savings.
You can no longer purchase paper savings bonds (the government nixed that program a few years ago), however, the $25 EE bond can still be given electronically.
The 0.10 percent interest at purchase turns into 3.5 percent-plus rate of return once the bond is held for 20 years and its value doubles! Depending on the age of the recipient, it may mature in time for college expenses!
A friend of hubs Grandmother purchased bonds for him and his sister each year got about 10 years. The bonds started to mature a few years ago, so he’s been cashing them out as they mature. It was a very thoughtful gift, and over the years the money has come in handy.
The interest is subject to federal income taxes, but free from state and local levies.
To give a savings bond (available in any denomination from $25 to $10,000) an adult has to set up a Treasury Direct account in the child’s name, but the account is only accessible by the giver until the youngster reaches 18.
While the savings bond is only digital, making a certificate and attaching the receipt to the back (for mom and dad’s records) is a good idea. The Treasury website is there to help! There is still a choice of seven colorful gift cards that can be printed out and wrapped.
Heck, I heard that even Santa likes to give Savings Bonds!
For more details on giving savings bonds and the paperwork, click here.