Smart Mom Investing

Savings bonds, particularly Series I and Series EE bonds, increase in value based on a predetermined formula. For Series EE bonds, the value is guaranteed to double after 20 years, provided they are held until maturity. This means that if you purchase a $100 bond, it will be worth at least $200 after two decades, regardless of market conditions. On the other hand, Series I bonds offer a unique benefit by combining a fixed interest rate with a variable inflation rate, which is adjusted every six months. This ensures that the bond’s value keeps pace with inflation, effectively protecting your purchasing power over time. As a result, the value of these bonds can increase significantly, especially during periods of high inflation. Interest on both types of bonds compounds semiannually, meaning that the interest earned is added to the principal amount, allowing your investment to grow faster over time. Additionally, you won’t pay federal income tax on the interest until you redeem the bonds, which can also enhance the overall return on your investment. Holding onto these bonds for longer can lead to greater cumulative interest, making them not just a safe, but also a strategic savings option.