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As mentioned earlier, savings bonds are long term investment plans. The usual term for maturity of a savings bond is 30 years, after which you receive your investment along with the interest that has accrued over the term of the bond. However, there are series HH and H savings bonds who mature after 20 years.
However, this does not mean that you can not cash in savings bonds before they mature. There are provisions that allow you to redeem savings bonds but with a few restrictions. You cannot cash in savings bonds for 12 months after the original date of purchase. After that you can cash in the bonds. However, if you decide to cash in the bonds during the first 5 years of purchase a penalty is levied on you. You will lose out on the last three months’ interest.
The interest from savings bonds is not seen by you. It keeps accruing until the bond matures and when you cash in or after maturity you get the entire amount. However, the interest is tax deferred and you do not have to report it when filing your taxes. You only pay taxes when you cash in the bonds.
If you purchase a savings bonds, it best not to redeem it until its maturity date. After the maturity date, you will not receive any interest. In most instances, savings bonds which are not cashed in until maturity double in value.
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