Almost every adult can remember at some point in his or her younger years being given a US Savings Bond by a grandparent or well-meaning relative for a birthday or graduation, and then being instantly frustrated by the fact that the bond couldn’t be converted into a Beatles album or Grand Theft Auto cartridge the very next day. Of course, that is the appeal of US Savings bonds as gifts (at least from the point of view of the giver): They are one way to (almost) force a young person you love to save.

The Savings Bond grandma gave you when you were twelve was a Series EE Paper Bond. Paper Series EE Bonds are purchased at half their face value. So, for example, a $50 paper bond costs $25. Series EE Paper Bonds mature at different rates depending on the interest paid, which is set by the federal government and changes every six months. You can’t really predict when a paper Series EE Paper Bond will mature. For example, if the interest averages 5%, a $50 Series EE Bond will mature in 14 and a half years. If it earns an average of 6% interest, it will mature in 12 years. Paper Series EE bonds earn market-based rates that usually are much higher than deposit account rates at retail banks.

You can also purchase Series EE bonds at face value electronically for up to $30,000. Most banks will help you to purchase Series EE Bonds, or you can purchase them directly from the Treasury Direct website at http://www.savingsbonds.gov/, and you can also manage your bonds there and find a wealth of information on bonds and investing, all free of charge.

Another less familiar kind of Savings Bond is the government I Bond, which is an accrual-type security, meaning interest is added (accrues) monthly, much like a savings account. The interest is paid when the bond is cashed. I Bonds can earn interest for as long as 30 years depending on how you set them up. I Bonds purchased after 2003 must be held at least 12 months before they can be cashed.

You will owe tax on interest on both I Bonds and Series EE Bonds, but the interest can be deferred in for a number of reasons. Tax is not owed on the interest earned on I Bonds that are cashed. With Series EE Bonds, you want to make certain you cash them by or before the maturity date, since you will owe tax on the interest on the maturity date whether you cash them or not, and since they also quit earning interest on that date.

Bonds are attractive when the stock market is a mess (like now), but there are strict limits on the amount you can purchase. You can buy up to $30,000 in paper and electronic I bonds (for at total of $60K), and $30,000 in paper and electronic series EE Bonds (for a total of 60K). So, you can’t have more that $120K locked up in bonds in your name, and you can’t get around this by changing up the other signers like you can on other kinds of interest bearing accounts. Basically, if your name is on the bond, it counts toward your total allowance no matter who else is on it.

Savings Bonds are regulated by the same great folks who brought you the US tax code, so don’t expect all the rules, regulations, and rates to be transparently easy to comprehend, especially if you’ve been buying them for awhile. The rules are changing all the time in regard to bonds. Once you’ve purchased a bond, those specific rules for that specific bond do not change. But you could come back a year later and find that everything has been moved around and new rules apply.

Other great sites to find information on bonds, how to manage them, how to buy them and which ones to buy, and all the rules and regulations that apply to them include The Bureau of Public Debt, Tom Weishaar’s Savings Bond Advisor site, and Jack Quinn’s Savings Bond Information Center.

For current rates on Series EE an I Bonds you can also call 1-800-4US-BOND (1-800-487-2663) or any Federal Reserve Bank, or you can write to request a rate table to The Bureau of Public Debt, Bonds Div., Parkersburg, WV 26106-1328.

You don’t have to wait for an excuse to buy bonds, and frankly, they’re a great way to save without even thinking about it.  All you need to do is set this up at the Treasury Direct website, www.savingsbonds.gov.

You can download the Beatles Album anytime you want from I-Tunes.

All you need is love. And Savings Bonds.