US Savings Bonds

Posts Tagged ‘us savings bonds prices’

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: Interest rate vs. bond prices?

In order to combat inflation, The Fed would increase interest rate which will depreciate bond prices. Does this action affect short-term, intermediate-term, or long-term bonds and why? I am worried because a significant chunk of my retirement savings is in a total bond-market index fund (intermediate-term). Thanks.

Answer: The only rate the Fed has real control over is the Fed Funds rate which is an ultra-short term (overnight) rate.

What the Fed is doing now is keeping rates artificially low in order to provide liquidity to the markets. When they stop doing that, rates will rise and bond prices will fall. This is the worst time since the early 1980s to own bonds. Get out now.

Personal Finance : How to Buy Bonds