Savings bonds used to be all the rage. Well, back in the 40s when it was “in” to be patriotic, everyone was buying up bonds. Since the U.S. Treasury decided to stop the production and selling of paper bonds, it seems as if that patriotic, yet outdated, investment has left the minds of everyone. Or, had we forgotten about them way before that?
I remember getting bonds from my grandparents when I was little. Actually, I remember my Mother telling me about the bonds as she tucked them away someplace. To this day, I still don’t recollect if we cashed those in or if they are still hidden in a tomb somewhere. At this point, would it really make a difference? Savings bonds are still available to purchase electronically on the Treasury Direct website, thus putting even more of our finances online. Luckily any paper bonds that we still have can be cashed in, so if I happen to have a few laying around in my parents’ home, I won’t miss out. But, even with them being available online, the return on investment has decreased dramatically.
In the past 6 years, bonds have gone from an interest rate of 3.7% to a meager 0.6%. Also, with online savings resources such as ING direct, Smarty Pig and my personal favorite, ImpulseSave, why would we restrict ourselves to a bond that can’t be cashed in for years? Buy placing a dollar a day or a week, into an online savings account, we can create a small savings to pass onto our kids, or grandchildren, when they reach legal age. Or, in our case, we’ll be passing on the savings when they graduate college or trade school. If we decide to give it to them earlier, there is no penalty to do so. I call that a win-win in savings.
Did any of you receive paper Savings Bonds as a child or teen? Did you cash them in or have you lost track of them?
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I just dealt with this issue as we were looking to buy our nephew a bond.
Bonds now are nothing like when we were younger. Not only are they electronic but whatever the face value you buy is how much they are worth. No longer can you buy a $50 bond for $25 and have to wait for maturity for it to be worth $50. You still have to wait 6 months to cash a bond in after buying it(that is the same), so you really aren’t tying your money up for years and years anymore.
But if you give a bond, the recipient has to have or has to open a Treasury direct acct. to receive the bond. That is a PITA as far as I’m concerned.lol
And interest rates on bonds have been variable for many years….I want to say any bond purchased after 1985? but I’d have to look it up. The Treasury rates on bonds are just reflective of the interest rates that are currently given on all financial instruments from private banking institutions. If rates ever tick up back to 3-4%, Savings Bonds will to.
Hope this helps clear things up.
That reminds me we have about $4000.00 in bonds in a safe in the closet. I really think we should go put them in a bank some where. Even a CD would be better. Time to talk to hubby. Thanks for the tip!
I have one I bond that is over 3% (It has averaged about 4% in the last 5.5 years). I will only buy I bonds when the fixed rate is 1% or greater. For now I will stick with my high yield checking (2%) and paying down my student loans.
I had this conversation with my brother not long ago. He received some when he graduated from high school and told me instead of getting a Treasury Bond to get a CD at the bank for a better return on my investment.