What Is A Savings Bond ?

What is a savings bond? A savings bond is a government bond. It is a bond sold to the public. When you buy a government bond it is a promise to pay out an amount on a set date. This date is called the maturity date. Government Bonds also make periodic interest payments.

What Is A Savings Bond

What Is A Savings Bond

What is a savings bond risk? Government Bonds are often called risk free. It is ¬†dangerous to think any investment/savings is risk free. I like to compare it with looking at houses. The foundation of a savings bond will be the government offering the bond. High risk governments usually make higher interest payments. They need to attract people to buy their bonds. Watch politics carefully when choosing a government bond. Sudden changes can cause currency to drop over night. So higher interest payments in unstable countries are not worth the risk if you can’t afford to loose any value.

What is a savings bond value? Value is very important. With government bonds you are  promised a set amount at the end of your term. Most make regular interest payments too. This is why people think there is no risk. With money we usually compare currencies. So an easy way to see if you are loosing value is if the currency drops.

What is a savings bond worth? Another way of looking at the value of a savings bond is to watch inflation. Compare how much items cost over a time period. What is a savings bond that can’t match inflation? A loss! This is important for any investment. When looking at inflation do look at your standard of living. The basic basket of goods that is used to calculate inflation does not include many things you will buy regularly. Compare those prices too. This will give you an idea of the worth of the bond to you.

This is a discussion on “what is a savings bond” and not financial advice.

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One Response to What Is A Savings Bond ?

  1. Claudia Bulcao January 17, 2012 at 1:56 pm #

    Thank you for this information. It is very interesting and informative.

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