SAVINGS BOND Meaning and
Definition
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A savings bond refers to a type of investment instrument issued by the government, typically the treasury department, to generate funds for national projects and activities. It is considered a safer form of investment as compared to various other investment options available in the market. Savings bonds are specifically designed to offer a low-risk, long-term investment opportunity for individuals. They are often backed by the full faith and credit of the government, providing a guarantee of the principal amount invested.
A savings bond functions as a debt security where investors lend money to the government by purchasing the bond. In return, the government pays interest on the bond over a specified period until it matures. The interest rate on savings bonds is fixed and determined at the time of purchase, with different types of bonds offering various rates. This fixed interest rate ensures a steady income for the investor over time.
Savings bonds are typically non-transferable and have a predefined period, ranging from several months to several years, until they reach maturity. Once a savings bond matures, the investor is entitled to receive the initial amount invested together with the accrued interest. These bonds are usually sold at face value, meaning they can be purchased for the full amount they will be worth when they mature.
Savings bonds offer several advantages for investors, including low minimum investment requirements, guaranteed return of principal, and a safe investment option backed by the government. Additionally, they are free from state and local taxes, making them an attractive investment choice for those seeking a low-risk, tax-efficient investment.
Common Misspellings for SAVINGS BOND
- aavings bond
- zavings bond
- xavings bond
- davings bond
- eavings bond
- wavings bond
- szvings bond
- ssvings bond
- swvings bond
- sqvings bond
- sacings bond
- sabings bond
- sagings bond
- safings bond
- savungs bond
- savjngs bond
- savkngs bond
- savongs bond
- sav9ngs bond
Etymology of SAVINGS BOND
The word "savings bond" is a compound term that consists of two individual words: "savings" and "bond".
1. Savings: The term "savings" originated from the Middle English word "saving" which meant to save money or to put aside funds for future use. This word can be traced back to the Old French word "sauver" meaning "to save" or "to rescue", ultimately derived from the Latin word "salvare" with the same meaning.
2. Bond: The word "bond" has its roots in the Old English word "bond" or "bund", which referred to a binding, connection, or tie. It is derived from the Old Norse word "böndi", meaning "peasant" or "one who lives on the land".
Similar spelling words for SAVINGS BOND
