Series EE Bond

AAA

DEFINITION of 'Series EE Bond'

A non-marketable, interest-bearing U.S. government savings bond that is guaranteed to at least double in value over the initial term of the bond, typically 20 years. Most Series EE bonds have a total interest-paying life that extends beyond the original maturity date, up to 30 years from issuance.

INVESTOPEDIA EXPLAINS 'Series EE Bond'

Series EE bonds issued after May 2005 are assigned a fixed coupon rate; rates are set twice per year in May and in November and apply to all issuances for the ensuing six months. Bonds issued after this date increase in value monthly, but interest payments are semiannual.

Paper EE bonds are issued at a 50% discount to par, while bonds purchased electronically (through TreasuryDirect) are purchased at face value; the latter are still guaranteed to be worth twice their original value at first maturity date after 20 years, and pay interest the same way as paper EE bonds.

Series EE bonds are considered ultra-safe, low-risk investments. Interest on Series EE bonds is typically exempt from state and local taxes, and coupon rates are assigned based on a percentage of the long-term Treasury rates at the time of issuance.

Savings bonds must be held at least one year before they can be redeemed. If they are held for less than five years, a penalty of three months' interest will be assessed when the bonds are redeemed.

RELATED TERMS
  1. Bond

    A debt investment in which an investor loans money to an entity ...
  2. Sharpe Ratio

    A ratio developed by Nobel laureate William F. Sharpe to measure ...
  3. Series I Bond

    A non-marketable, interest-bearing U.S. government savings bond ...
  4. Savings Bond Plan

    A program that allows employees to purchase U.S. savings bonds, ...
  5. Discount Bond

    A bond that is issued for less than its par (or face) value, ...
  6. Interest

    1. The charge for the privilege of borrowing money, typically ...
RELATED FAQS
  1. How long will it take for a bond to reach its face value?

    The time it takes a savings bond to reach face value depends on the series of bond and the value at which it was sold. There ... Read Full Answer >>
  2. How do I sign up for a TreasuryDirect account?

    Signing up for a TreasuryDirect account is as simple as going to the TreasuryDirect website and choosing an account type; ... Read Full Answer >>
  3. Where can I buy government bonds?

    The type of bond determines where you can purchase it, so you need to decide which type of bond you would like to purchase ... Read Full Answer >>
  4. Which securities are considered investment grade?

    In finance, government and private fixed income securities, such as bonds and notes, are considered investment grade if they ... Read Full Answer >>
  5. When should a company consider issuing a corporate bond vs. issuing stock?

    A company should consider issuing a corporate bond versus issuing stock after it has already exhausted all internal forms ... Read Full Answer >>
  6. How is a corporate bond taxed?

    A corporate bond is taxed through the interest earned on the bond, through capital gains or losses earned in the early sale ... Read Full Answer >>
Related Articles
  1. Bonds & Fixed Income

    Savings Bonds For Income And Safety

    Bonds offer undeniable benefits to investors, including safety and tax advantages.
  2. Mutual Funds & ETFs

    The Bond Market: A Look Back

    Find out how fixed-income investments evolved in the past century and what it means today.
  3. Taxes

    Taxation Rules For Bond Investors

    Several factors affect the taxable interest that must be reported. Learn more here.
  4. Home & Auto

    The Bear On Bonds

    Bond investing is a stable and low-risk way to diversify a portfolio. However, knowing which types of bonds are right for you is not always easy.
  5. Retirement

    Bond Basics Tutorial

    Investing in bonds - What are they, and do they belong in your portfolio?
  6. Bonds & Fixed Income

    Advanced Bond Concepts

    Learn the complex concepts and calculations for trading bonds including bond pricing, yield, term structure of interest rates and duration.
  7. Investing Basics

    Explaining Banker's Acceptances

    A banker’s acceptance (BA) is a way for two unfamiliar parties to transact business on credit.
  8. Bonds & Fixed Income

    How Are Zero-Coupon Municipal Bonds Taxed?

    What every investor needs to know about taxes and zero-coupon muni bonds.
  9. Bonds & Fixed Income

    Muni Bonds, Taxable Bonds or CDs: Which is Best?

    Here's how to tell if municipal bonds are a better investment than taxable bonds or CDs.
  10. Professionals

    Why You Should Avoid Fixating on Bond Duration

    Financial advisors and their clients should then focus on a bond fund’s portfolio rather than relying on any single metric like duration.

You May Also Like

Hot Definitions
  1. Fracking

    A slang term for hydraulic fracturing. Fracking refers to the procedure of creating fractures in rocks and rock formations ...
  2. Mixed Economic System

    An economic system that features characteristics of both capitalism and socialism.
  3. Net Worth

    The amount by which assets exceed liabilities. Net worth is a concept applicable to individuals and businesses as a key measure ...
  4. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit ...
  5. Covered Call

    An options strategy whereby an investor holds a long position in an asset and writes (sells) call options on that same asset ...
  6. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
Trading Center