US Savings Bonds

Archive for April, 2009

Question: A coworker is having a baby, we would like to buy her a savings bond or something of that nature?

Any suggestions?

A Savings bond? A CD?

Something that will mature nicely by the time the baby turns 18.
Also, what would each of us be looking at as far as price. There are 9 of us.

Thanks in advance!

Answer: If you really want the most bang for your buck (and to impress your co-worker with your financial prowess) I’d recommend a Coverdell Educational Savings Account. A Coverdell is a tax advantaged account that you can hold investments in (like Mutual Funds). I personally would recommend investing in the Fairholme Fund (ticker symbol FAIRX). The FAIRX has averaged around 16% and has only had one losing year where it only lost 1.6% (even through the early 2000s). You can set this up through any broker that offers the FAIRX fund, like Schwab (who I use for my investments), without any account fees. If you invested $1000 into this fund you could expect there to be about $15,000 (all tax free) by the time the child is ready to go to college. Below is some more information:

Launching Lifeboats Before the Ship Sinks

Question: TAX on Savings Bonds?

Do you have to pay tax on savings cashed to updated to larger bonds such as 500 dollars in bonds and then upgrade to 1000 dollar bond?

Answer: Yes. Once the bond is cased the interest earned is taxable. At one time you could exchange E or EE bonds for H bonds but no longer.

WVTV 18 PSA – Savings Bonds {train} [1 min] (1987)

Maynard’s Revenge: Keynesianism and the Crisis