Baby Bonds are savings type securities that are available in denominations of $5000 or less. The financial markets baby bonds are either early U.S. government savings bonds or small denomination Muni bonds issued by various cities and states usually to fund government construction projects. The savings bonds typically have maturity periods of 7 to 15 years, and are zero-coupon-bonds, most often rated-A or better in the bond market.

There are no fees or sales commissions to buy baby-bonds and they are usually purchased in-person by small investors from the local governments treasurer's office who has issued the babybonds. As an example of a baby bond the City of New York recently offered a government BabyBond which may be purchased for $975 with a face-value or redemption value at maturity of $5000 face value if redeemed after 11-years, which results in a interest rate yield of 6 percent plua.

Baby bond buyers are responsible for managing the baby-bonds themselves from storing the baby bonds, keeping the actual bond, to remembering the baby bond maturity date when it obtains full cash value and can be redeemed. BabyBonds may be deposited in a brokers account, if the baby bond owner has a brokerage account, Some large financial institutions are acknowledging baby bonds are a growth market and make good investments similar to InternationalGovernmentBonds.com and 30yearTreasuryBonds.com and subsequenty are starting to offer babybond financial management wealth services to wealthy brokerage clients.

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