Saturday, December 15, 2007

Why Lower Annual Purchase Limit For Savings Bonds to $5000?

To funnel more money toward Wall Street, perhaps?

Purchasing United States Savings Bonds offer many advantages to investors who want to avoid the cost of investing. Aside from lack of commission upon purchase or redemption, other advantages of purchasing EE bonds include:

Full backing of the government,

Deferell of interest income tax.

Exemption of interest income from city or state income taxes.

They can be bought from most financial institutions, including TreasuryDirect.

I Bonds, unlike other bond funds are inflation-indexed savings bonds and are adjusted semiannually so as to keep up with inflation and protect the purchasing power of your money.

I Bonds are also backed by the full faith and credit of the U.S. government, require no commission upon purchase or redemption, can be purchased at most financial institutions and their earnings are exempt from state and local taxes, can be tax-free if used for post-secondary education expenses and can be deferred for up to 30 years.

They are sold in denominations, ranging from $50 to $10,000, that is until January 1, 2008 when the $10,000 I Bond will no longer be available.

Effective 2008, an individual can purchase the $5,000 annual limit in both electronic EE and I bonds at TreasuryDirect and in both paper EE and I bonds for a total investment of $20,000.

Those who advocate for limiting how much an individual can spend on US savings bonds say this move can only make our economy stronger. However, in an age where the average CEO earns approximately $14.7 million per year, versus $29,544 for the average worker, it is just as important to consider who is benefitting from the "strong" economy. Limiting the average American's already limited investment opportunities is just another attempt to increase the wealth gap.

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