Continuing to serve you in a thoughtful way.

Throughout the challenges of recent months, we've continued to safely serve investors' needs. We are thoughtfully evaluating our office openings and in-person appointments. Learn more.

Zero Coupon Bonds

Zero coupon bonds (or STRIPS) are bonds that you can purchase at a deep discount and redeem at a set date (maturity date) at face value.

These bonds compound semi-annually at the corresponding yield that you lock in at the time of purchase. Unlike other bonds, zero coupon bonds do not pay interest regularly.

Zero coupon bonds offer the following features:

  • Safety – Your investment is backed by the full faith and credit of the issuer as to the payment of the face amount at maturity.
  • Small initial investment – A small investment today can grow into a large one over time.
  • Market value fluctuations – As interest rates change, the market price of zero coupon bonds changes.
  • Liquidity – You can sell zero coupon bonds at their market value at any time before the maturity date.
  • Phantom income – You must pay taxes on the "phantom income" or "accreted value" each year that you own a zero coupon bond.



We can help

At Edward Jones, we can help you reach your financial goals. Contact your Edward Jones advisor.

Find an Advisor

Find an Advisor

Enter a Province and then enter a last name

    Our Investment Philosophy

    We believe in long-term investing with an emphasis on quality and diversification.

    Read more

    Investing Considerations for You

    If you're new to investing, a woman, a business owner or facing one of life's important milestones, this section addresses the topics that are unique to you.

    Read more