What type of savings security is a Series EE bond?

A Series EE bond is classified as an appreciation type savings security that is sold at face value. This means that when an individual purchases a Series EE bond, they pay the bond's face value. For instance, if you buy a bond with a face value of $100, that is the amount you pay upfront, even though it may take time for the bond's value to increase as it earns interest.

The way Series EE bonds work is that, over time, they accumulate interest. This interest is compounded and added to the bond's value at regular intervals, which reads as growth or appreciation of the investment. The bond does not pay periodic interest like traditional bonds but rather increases in value until it reaches a certain maturity date, at which point the owner can redeem the bond for its worth.

This feature of selling at face value and appreciating over time distinguishes Series EE bonds from other types of investments. For example, unlike common stocks, which are purchased on the stock market and subject to price fluctuations, or high-yield investment options that might imply higher risk and potentially returns, Series EE bonds are backed by the government and provide a stable, long-term growth investment.