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<\/p>\nAs retail investors diversify outside of an equities-only portfolio, many are looking at savings bonds as an opportunity to capitalize on rising interest rates. Historically, they are one of the oldest and most trusted investment products. They\u2019re backed by the full faith and credit of the United States government, and they offer investors options to both preserve and grow their wealth. They\u2019re widely considered a defensive investment and tend to rise in popularity as the stock market falls on hard times.<\/p>\n
Let\u2019s take a closer look at savings bonds: what they are, how they work as investment vehicles and how to best leverage them into a defensive portfolio. Plus, we\u2019ll look at the role of savings bonds within the context of a recession.<\/p>\n
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A savings bond is a long-term depository investment made with the United States Treasury. They offer investors a guaranteed rate of return on their money, depending on how long they hold it. There are actually two types of savings bonds<\/a> investors can consider:<\/p>\n Savings bonds are the ultimate \u201cset it and forget it\u201d investments because, unlike other ones that pay interest and fluctuate based on the bond market, these investments are best held for the long-term. It\u2019s best to invest in them when your time horizon on realizing their gains is 20-30 years.<\/p>\n Series HH savings bonds were also available from 1980 through August 2004. These bonds had a maturity date<\/a> of 20 years and functioned similar to Series EE bonds, though they paid interest bi-annually. Investors who still hold Series HH bonds can continue to collect interest on them or cash them in at face value.<\/em><\/p>\n Savings bonds are one type of U.S. Treasury product<\/a>, alongside T-Bills, T-Notes, T-Bonds and Treasury Inflation-Protected Securities (TIPS). The key difference between savings bonds and other U.S. Treasuries is rate of maturity. T-Bills mature in less than 52 weeks. T-Notes mature in less than 10 years. T-Bonds mature in 20-30 years and pay interest, unlike savings bonds, which deliver ROI at the time of redemption.<\/p>\n It’s often simpler to think about savings bonds as deposits that earn interest, whereas other U.S. Treasuries are debt investment products. They work similarly to a savings account.<\/p>\n Given the option to put your money in savings bonds vs. a savings account (or even a debt investment), savings bonds offer some excellent benefits to consider<\/a>. Some of the primary reasons you might invest include:<\/p>\n Savings bonds offer interest-earning opportunities, combined with the flexibility to either let your money grow risk-free for 30 years or pull it out penalty-free after five years. They\u2019re also very accessible to any investor.<\/p>\n\n
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Savings Bonds vs. Other Treasuries<\/h2>\n
The Major Benefits<\/h2>\n
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