What is a savings bond?

A savings bond is indeed a government-issued bond used to finance government spending. When individuals purchase savings bonds, they are effectively lending money to the government, which is then used for various public projects, such as infrastructure or education. In return, the bondholder earns interest over time, making it a secure investment option.

Savings bonds are generally considered low-risk investments, backed by the full faith and credit of the issuing government, which adds an element of safety for investors. Unlike other types of bonds, such as corporate or real estate investments, savings bonds offer more straightforward terms, with the promise of gradual growth over the bond's term until they reach maturity.