Higher-risk investments like stocks have historically doubled money faster (around seven years) compared with lower-risk options like bonds (around 12 years).
EE bonds are guaranteed to double in value after 20 years.
Series EE savings bonds are a low-risk way to save money. They earn interest regularly for 30 years (or until you cash them if you do that before 30 years). For EE bonds you buy now, we guarantee that the bond will double in value in 20 years, even if we have to add money at 20 years to make that happen.
If it's fully matured (30 years since issue date) then you definitely want to cash it since it's not longer earning any interest. If you still have bonds that were issued before May 1995 you may want to leave them until they are fully matured as those are earning at a higher interest rate.
There is no penalty for holding onto a Series EE savings bond past the 30-year maturity period. Once a Series EE bond reaches its final maturity, it stops earning interest, but there are no penalties associated with holding onto it beyond that point.
Bonds are long-term securities that mature in 20 or 30 years. Notes are relatively short or medium-term securities that mature in 2, 3, 5, 7, or 10 years. Both bonds and notes pay interest every six months.
If a bond is held past its maturity, the federal government remains responsible for the debt. However, savings bonds that are held past their maturity date do not continue to earn interest and may actually lose value due to inflation.
The current I-bond rate, valid for bonds issued November 1, 2024 through April 30, 2025, is 3.11%. That includes a fixed rate of 1.20%. To put that in context, the best high-yield savings accounts and the best CD rates are giving returns over 5%. However, rate cuts have brought CD rates down from their high in 2024.
Do you know the Rule of 72? It's an easy way to calculate just how long it's going to take for your money to double. Just take the number 72 and divide it by the interest rate you hope to earn. That number gives you the approximate number of years it will take for your investment to double.
Savings Bonds, known as Series I Bonds or Series EE Bonds, are good investments for a grandchild because they're convenient, have no fees and are ultrasafe. Their monthly interest is guaranteed by the U.S. government for the 30-year life of the bonds.
Can you cash in a savings bond at any bank? Savings bonds can generally be redeemed with the bank where you have a checking account. For example, at Bank of America, customers who have had a checking or savings account open for at least six months can easily cash in their savings bonds.
Use the Education Exclusion
With that in mind, you have one option for avoiding taxes on savings bonds: the education exclusion. You can skip paying taxes on interest earned with Series EE and Series I savings bonds if you're using the money to pay for qualified higher education costs.
To use the rule of 72, divide 72 by the fixed rate of return to get the rough number of years it will take for your initial investment to double. You would need to earn 10% per year to double your money in a little over seven years.
In the U.S., two types of savings bonds are available to purchase. Series EE bonds are guaranteed to reach their face value after 20 years. Meanwhile, Series I bonds don't come with guarantees and mature after 30 years. Both bonds can also be cashed out at a cost after one year or penalty-free after five years.
Maintain your current lifestyle in retirement
For most people, having around 70% of their current take-home pay, is the amount of money they need in retirement to keep the lifestyle they have now. To work out how much you might need, this is a good place to start.
If you're saving for education or retirement, Roth IRA and 529 accounts are popular options to explore. And they may offer better tax deductions or a higher Annual Percentage Yield (APY) than a savings bond.
I bonds have important tax advantages for owners. Interest earned on I bonds is exempt from state and local taxation. Also, owners can defer federal income tax on the accrued interest for up to 30 years.
EE bonds issued between November 1, 2024 and April 30, 2025, bear an interest rate of 2.60%. They will earn that interest rate for the first 20 years you hold the bond and may be adjusted after 20 years.
Flexibility: Savings bonds aren't very flexible. They're locked in for at least a year and incur a penalty of the last three months' interest if redeemed in less than five years.
It's possible to redeem a savings bond as soon as one year after it's purchased, but it's usually wise to wait at least five years so you don't lose the last three months of interest when you cash it in. For example, if you redeem a bond after 24 months, you'll only receive 21 months of interest.
For those fully matured bonds remaining unredeemed, there is no active program by the Bureau to locate the bondholders and pay them the proceeds to which they are entitled. Traditionally, it has been up to the registered owner to remember to redeem the matured bond decades after the initial purchase.
I bonds offer inflation-adjusted interest rates, which can make them a popular option for investors looking to preserve the purchasing power of their investments. EE bonds, on the other hand, may appeal to those seeking predictable, long-term returns, due to their fixed interest rates and tax advantages.
The most common way to buy bonds is either through a broker, mutual fund, exchange traded fund, or directly from a government. You can buy bonds through a broker, just like you can buy stocks and other investments. The bonds you buy are typically sold by investors.
At 20 years: Series EE bonds are guaranteed to double in value. 3. At 30 years: The bonds stop earning interest and should be cashed in to avoid missing out on returns from other investment opportunities.