Bond is simply an investor owned utility (IOU) in which an investor agrees to loan money to a government agency or to a company for a predetermined interest rate. The interest rate paid on bonds depends on several factors such as financial strategy of the government in power or the strength of the corporation; current market interest rates, and the length of the term. As these factors fluctuate over time, the market value of a bond may also vary after it is issued.
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Introduced in 1956 by Harold Macmillan, premium bond is defined as a government bond which is priced greater than par. According to National Savings and Investments (NS&I), around 23 million people are premium bond holders.
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If you are you looking for a way to invest, and gain a tax advantage at the same time, consider investing in savings bonds. They can be purchased for as little as twenty-five dollars, or in larger denominations if desired.
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The death of a U.S. Savings Bond holder has some ownership and tax responsibilities for the surviving bond holders. There is a protocol established by the U.S. Treasury in redeeming bonds owned by deceased bond holders.
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