Investing from the comfort of home

Filed under: Focus |

No need to get dressed – United States savings bonds can be purchased online through TreasuryDirect, a Bureau of the Public Debt Web site.

For folks interested in adding to their investment portfolios or for those who want to save for their child’s education or for retirement, U.S. savings bonds are a safe purchase.

The U.S. Department of the Treasury’s Bureau of the Public Debt established the Web site www.TreasuryDirect.gov in October 2002, said Steve Meyerhardt, a spokesman for the bureau. Since then, thousands of U.S. citizens have set up online savings accounts with the government.

“We have over 300,000 accounts that have been established to date,” Meyerhardt said. Between 2,500 and 5,000 new accounts are established each week, he said.

TreasuryDirect only offered series I bonds in the first months of the Web site and added EE bonds less than a year later.

I bonds and EE bonds earn interest in different ways, but Meyerhardt said he did not feel one was preferable to another. There is no direct link between inflation and EE bonds, he said. I bonds may be purchased at face value ($300 is spent on $300 in savings bonds) through TreasuryDirect and the minimum purchase is $25.

I bonds accrue interest on a monthly basis and the current interest rate is 3.67 percent through the month of April.

Series EE bonds offered through TreasuryDirect also earn interest on a monthly basis. However, one crucial difference between paper EE bonds and those purchased online is that, unlike the paper version, online EE bonds are also sold at face value.

The current interest rate for EE bonds is 3.25 percent through April.

Buying U.S. savings bonds is a conservative way to invest for the future, said Tim Mason, vice president for the western division of AXA Advisors.

“Someone who is more conservative, there is definitely a place for bonds in their portfolio,” Mason said. However, even low-risk investing can lead to problems, he said. “It’s a challenging time for bonds right now because of interest rates,” he said. “A lot of people associate a bond with no risk.” This is not always the case. As interest rates go down, the values of bonds increase, Mason said.

EE bonds and I bonds earn interest in different ways.

Interest earnings for EE bonds are calculated as 90 percent of six-month averages of five-year Treasury Securities market yields, according to TreasuryDirect. The interest earned on I bonds is determined by combining a semiannual inflation rate based on the consumer price index and a fixed rate of return.

I bonds guarantee an interest rate 1 percent above the rate of inflation, Meyerhardt said. “For most of the time we’ve offered both securities, the I bond has been more popular,” he said.

“There’s a gazillion financial products on the marketplace,” Mason said. “Everybody has a different situation and you really have to do your due diligence and your research.”

Mason works with his clients on an individual basis to determine which products will help them the most in the long run. A lot of the folks who meet with Mason are focused on how to access revenue streams from assets accumulated over time, he said.

Managing retirement income streams is a focus at the moment because about 2,000 people are turning age 50 every day, he said.

Life expectancy is greater than ever before, so planning for retirement tends to assume a greater sense of importance for many. “People are living into their 90s now,” Mason said.

With U.S. savings bonds, either EE or I, people can save as little or as much as they’d like. Well, to an extent. People can purchase a maximum of $30,000 per year in EE bonds and $30,000 per year in I bonds – for an annual maximum online purchase of $60,000.

It is possible to have linked accounts, so minor children can be included on an account with a parent or guardian, Meyerhardt said.

To open an account log on to www.TreasuryDirect.gov, follow the directions and e-mail the necessary information to the Bureau of the Public Debt. “Once we receive the information that’s required it only takes about a couple of minutes to get an account started,” Meyerhardt said.

Account holders can access their information online 24 hours a day, seven days a week.

At the end of the day, folks who buy savings bonds know their money is in a safe place. “Government bonds are backed by the full faith and credit of the government’s ability to tax,” Mason said.

- Stephanie.Cline@csbj.com