EE Bonds
These bonds are a low risk and safe savings product that will pay the holder interest rate for up to thrity years based on current market rates.

They are sold at one-half face value which makes them a popular gift for young children. For instance, a $50 bond is sold for $25. As of this update, they are paying 3.20% through April 2006.

Like the I-Bond, the holder must retain ownership for at least one year with an interest earning period of thirty years. If you do cash them in within the first five years, you forfeit the three most recent months of interest payments.

They also have the same tax advantages: exempt from state and local taxes but subject to Federal, State, and local estate, inheritance, gift, and other excise taxes unless of course they are used for educational purposes.