How Does a Bond Reach Maturity?

Ever since you were a little kid you have loved classic entertainment. Popeye and Bugs Bunny cartoons (circa WWII), as well as, old black and white films from the time not only fed your imagination, but also fueled your brain to be inquisitive. Aside from being entertained, many of the movies held subtle references to War Bonds and Savings Bonds and you were determined to figure out the meaning of those words.

Over time you researched and found out that Savings Bonds were a way to loan the government money while investors are guaranteed a return on the investment. Hollywood played a huge role in marketing the value of the federal commodities and encouraged many people to purchase bonds and hold onto them until they reached maturity. But the question still remained. How Does a Bond Reach Maturity?

The only thing that helps a Bond Reach Maturity is time, which depends on the type of bond. I series Bonds are sold with a 30-year maturity date and the EE bonds’ maturity dates fluctuate from 8-20 years. ¬†An individual can cash out their bonds and get the full face value of the purchase as well as the compounded interest earned over that time period. Bonds stop earning interest after 30 years. Depending on the amount of the original investment, the amount earned can be in the tens of thousands of dollars.

Savings Bonds are considered a liquid asset and can almost be cashed in any time before a Bond Reaches Maturity to get access to the money. During the first year of the bond purchase the money cannot be accessed. Prior to five years of owning the bond, they can be cashed out but there is a penalty fee involved. After five years a bond can be redeemed with no penalty. But the best use of a Savings Bond is for a long-term investment strategy and just waiting out time until a Bond Reaches Maturity.