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The Basics About Bonds

Savings Bonds as Investments

By Megan L. Fowler

Bonds can be purchased at any bank, savings and loan or credit union as long as it is a "Savings Bond Agent," says Stewart. "Many employers also offer a payroll savings bond purchase plan," she says. And they can also be purchased online at the Bureau of Public Debt's Web site (www.publicdebt.treas.gov/of/ofbasics.htm).

Unlike other investments, savings bonds are very straightforward and clear-cut, so there is nothing to negotiate. Before purchasing one you should first decide what your expectations are for the investment, says Peņa. Ask yourself a few questions like these: Do you want an aggressive product with a high rate of return? What type of investment suits your financial needs? How long do you want to have your funds invested? "Savings bonds are a conservative and secure investment vehicle," says Peņa.

Stewart cautions, however, to monitor your bonds and to always be aware of their worth. "If you buy them periodically, like through an employer's payroll purchase plan, you will get a mix of interest yields on the savings bond portfolio," she says. "Series I bonds are indexed for inflation (hence the name Series I). Series EE bonds are purchased at a discount, and the interest accumulates to make the bond mature at the face value or higher."

Want to see more?

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• Talk about it!