TAILIEUCHUNG - Using U.S. Savings Bonds to Reach Financial Goals

We propose a solution that is similar to the “Brady Bonds,” used to prevent default in a number of Latin American countries. In the mid-1980s, Mexico and a number of other Latin American countries faced debt crises. In 1988, Mexico offered to exchange its debt obligations with new bonds that were collateralized by a thirty-year zero-coupon US Treasury bond. New bonds were issued by Mexico at market prices reflecting a discount of about 30% at which the old bonds were trading. Seventeen Latin American and other countries followed the initiative with similar plans. The bonds became known as “Brady bonds” after Nicholas Brady, then US Treasury Secretary | FE-597 loonọgssĩ TiULUtlUVVUUMW P liHi NMMIMMMIỈ _ Prepared by Using . Savings Bonds 1 to Reach Financial Goals Debra Pankow . Associate Professor Family Economics Specialist David Saxowsky . Associate Professor Agribusiness and Applied Economics from materials developed by former Denise M. Matejic Specialist in Family Resource Management Rutgers Cooperative Extension The purpose of this publication is to overview . Savings Bonds and to introduce them as an investment opportunity. This information is not a substitute for competent financial and legal advice. Additional information about Savings Bonds is available from the . Department of Treasury such as the Savings Bonds Owner s Manual available on-line at http mar NDSU EXTENSION SERVICE North Dakota State University Fargo North Dakota 58105 . Savings Bonds are safe vehicles for conservative investors with limited resources they offer an easy way to accumulate savings enjoy tax advantages that can reach into retirement and achieve financial goals such as financing a college education. Interest earned may be free from federal taxes if income limits are not exceeded at the time the bond is redeemed cashed-in . Some Savings Bonds also offer investors the benefit of the power of compound interest while building a savings nest egg. What is a savings bond Savings Bonds are debt instruments of the . Government issued by the Department of the Treasury that is when buying a Savings Bond you are lending money to Uncle Sam. Like any other investments the borrower the . government will pay the lender you interest for the use of the money. Savings Bonds are backed by the full faith and credit of the . Government. They are guaranteed against theft loss and destruction and can be replaced free of September 2003 charge. Because of the low risk and tax advantages associated with Savings Bonds the interest rate earned is less than many other investments. Consult a .

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