I just found out today that people can buy savings bonds from the US Treasury at face value. My question is: WHY would anyone want to do that when they can reap interest off from other types of treasury securities?
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Yes, you can buy them at face value. They still earn the pitiful interest rate same as if you had bought them at 1/2 face value. Unlike other treasury securities which are sold in $1000 denominations, savings bonds are sold in $25 denominations. That is one of the reasons people buy them. Another reason might be tradition. For a long time people bought savings bonds for themselves and for their children. And I suppose they passed the tradition on to their children.
Long term yield curve. I don’t know what the 10 year spot rate is for treasuries right now, but look at recent history. If you bought a t bond two years ago the annual rate for 2009 would have been about 3%. Earlier this year t bills were going for roughly 50 basis points. The yield curve compensates not just for a spot risk but for liquidity risk as well. Right now the market isn’t paying anything for liquidity risk so in some situations a tbond makes much more sense than a tbill.
Why? I started buying my bonds over 25 years ago when I was in the military, during that time and even today I feel its the patriotic thing to do. As for reaping interest? I have other investments, so I’m not to concern about the little interest I receive from these bonds
The classic EE savings bond is bought at 1/2 of face value. The face value was the representation of what the bond would do–though the interest rate is no longer tied to a specific maturity date.
The newer I-bonds (from 2000) are bought at face value.
I think you misunderstand. There are difference series of savings bonds.