What are the pros and cons of Series EE savings bonds?
Like other Treasury securities, Series EE savings bonds have the backing of the full faith and credit of the U.S. government, and the interest they pay is free from state and local (but not federal) income taxes. U.S. savings bonds are available in much smaller denominations than other Treasuries. You can buy them for as little as $25 apiece. They are issued at half their face value. When you buy a $100 bond, for instance, you pay $50 for it. They have no set maturity date and pay no current interest, but you can redeem them at any time from within six months of buying them to as long as 30 years later. You owe federal tax on the interest earned only when you redeem the bonds, unless you use them to pay tuition for college education. What are the disadvantages? In return for the safety, liquidity and tax advantages, you receive a lower yield than is available from most other bonds. How much lower depends on market conditions. Also, instead of paying your taxes along the way, you will h