If you are looking for a safe investment to save for college or retirement, savings bonds may be the way to go. The return on savings bonds is relatively low compared to other forms of investment but because savings bonds are backed by the US government they are a pretty safe investment. Savings bonds are not short-term investments; but if you're just looking for a long-term investment, savings bonds offer many advantages.

1. REASONS TO INVEST IN SAVINGS BONDS

Savings bonds are fully backed by the US government. When you invest your money into savings bonds you can guarantee that your money will be there when the savings bond matures.

Savings bonds are exempt from state and local taxes. When you purchase a savings bond and cash them in you are free from paying any state or local taxes which means more money in your pocket.

Savings bonds are federal tax deferred until you cash them in. Another advantage of savings bonds over other forms of investment is that you do not pay any federal tax until you cash the savings bond in. While other forms of investments require you to pay taxes on the interest earned, you don't have to claim savings bond interest as income until you retire and you may be in a lower tax bracket.

Use the savings bonds for education and be free of all taxes. Sounds almost too good to be true, but it is. If you use the savings bonds to pay for your child's college tuition and you fall within the eligible income brackets you are free from paying any taxes.

These are some great reasons to invest in savings bonds but there are some drawbacks. The rate of return on savings bonds is relatively low, so if you are looking to make money quickly, look elsewhere. Relying solely on savings bonds for your retirement is not the smartest move but savings bonds are a great way to supplement your retirement pension or you 401K.