US Savings Bonds

Archive for May, 2008

Question: Few easy questions, easy 10 points ^_^.?

Best answer wins

I deposit 300$ into a simple interest account that pays 3% after 7 months what will the total value of my account. (A) $309.00 (B) 305.25 (C) $321.00 (D) $9.00

Which of the following will pay a higher rate of interest?
(A) 8.10% with an 8.25% APY? (B) 8.00% with an 8.71 APY?(C)8.50% with an 8.66% APY? (D) 8.70% with an 8.70% APY?

I have $500 to invest and want to purchase a savings bond that will keep the pace with inflation, What government savings bond would be the best choice? (A) Series EE (B) Series HH (C) Series 1 (D) All are equal.

Answer: Bacon, Cucumber, and Applesauce.

http://answers.yahoo.com/question/index?qid=20090518164411AAQAY1y&r=w

Question: When to cash out U.S. bonds?

My grandmother bought $50 US Savings Bonds, series EE every year for my birthday when I was growing up. Now I have about 19 bonds and I am 28 years old. Most of the bonds have not matured and are not even worth $50 yet. I asked my banker about them and he suggested cashing them out now and putting the money into an mutual fund. Another banker said it was better to wait until they mature and get the full amount. What is the more financially profitable approach? I don’t need the money now and can wait until maturity if it is more profitable. Thanks!

Answer: The maturity date of Savings Bonds is not really important. What is important is what interest rate they are paying and if you could do better in another investment. Most bonds pay a relatively fixed interest rate, depending on when they were purchased. If you sell them now or 5 years from now, the rate will not change much. The only advantage to waiting until “maturity” is the added years of fixed interest. There is no premium for maturity on ee bonds.

Authors@Google: Burton Malkiel

Question: Thinking of cashing in my EE Series Savings Bond?

I have a US Savings Patriot bond worth 75 and it is currently paying me at $42.57 at a 3.40% interest rate. I am aware of paying the tax on the interest that I make and the 3 month penalty that I would occur if I pulled out. I was wondering if anyone thinks its worth it for me to wait until 2037 to cash it in. I’m 22 years old and I got this bond after I graduated from HS in 2007. Would it be worth it for me to hang onto the bond or cash it in now? Best answer for those who explain to me what I should do.

Answer: If you need the money to pay critical bills, then you should cash it in, and pay the tax & penalty accordingly.

But if you do not need it, and have other sources of cash, just hang onto it. 3.4% interest is a lot more than what banks are offering these days. The US government may not be quite as safe as it was years ago, but it’s still safer than many banks and financial companies.

I have several EE bonds and I intend to hold them until they mature, or until I desperately need the money, whichever comes first.

If you wait for just another year, and clear the 5 year holding period, you avoid the 3 months early cash-in penalty. Hope you can do that at least.

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