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Any interest?

From the month I was born until about 1975, my parents put aside money every two weeks to purchase US Savings Bonds for me. These were Series E Savings Bonds, yielding about 6.5% interest until maturity in 30 years. The thought was that this money could be used for college, a car, a house, or a wedding. After a while, my parents stopped buying them for my sister and I. In 1985, my parents bought a few largish EE bonds for me to make up the face value difference between my sisters bonds and I.

Well, time's been passing, and the first of the bonds are no longer getting interest. These bonds, which my parents purcahsed for $18.75 back in 1972 are now worth $128.05 each. I think I can exchange them over to an HH bond, but I haven't done enough research to figure out if that's a viable option for me. I think I have to pay interest on the first few, whether I cash them or not according to this web site. But if I roll them over to a HH bond, then I can defer the interest I think.

I'm so confused. It'd be nice to have some of this money for the honeymoon, ya know? But I think the taxes would be pretty sucky. Besides, what's the purpose of saving all this money forever if you aren't going to spend it? Jen and I aren't planning on having kids, so it's not like I'm creating an inheritence for them. I'm sure my nephew Michael will appreciate my inheritence, but I'm hoping that is many, many years from now. =) In the same respect, saving money for retirement is good too. *shrug* Suggestions and knowledge are appreciated.

Comments

( 2 comments — Leave a comment )
hmtriplecrown
Feb. 15th, 2003 04:28 pm (UTC)
EE to HH bonds
Oddly enough, I asked some bonds questions to a teller at the bank yesterday afternoon. You can transfer fully matured EE bonds to HH bonds, which will fully mature in 10 years. Also, you have to pay the interest income on those bonds, regardless if you roll them over to HH bonds or if you cash them.
missingdonut
Feb. 15th, 2003 10:12 pm (UTC)
Hmm... I hold some 30-year Series EE savings bonds, bought at birth. The taxes may be sucky, yes, but those $18.75 bonds would be worth (I think) $128.05 - ($109.30 * your tax bracket), which is still some scratch.

You're smart in thinking of using them for retirement, but it might be a good route to take the savings bonds and put them (net of tax) in a permanent retirement account. You're going to have to pay the taxes, yes, but
  (1) you'll eventually have to pay the taxes on them
  (1A) if you defer the interest, you'll probably/hopefully be in a higher tax bracket by the redemption :^)
  (2) Even though they carry little risk (such as, say, Latvia taking over the U.S. Government), series HH bonds pay crap interest.

My situation is good because the birth bonds will mature 22 days before my 30th birthday, so I can cash them in and reinvest them (net of tax) in another set of 30-year bonds. I'll be 60 when they mature, and by then I'll be close to retirement, or too senile to care.

HTH.
( 2 comments — Leave a comment )