savings bonds?

[Dutch445]

with a new granddaughter in the family having her Christening
this weekend a few of our family members were going to do the ol
savings bond gift.
as it turns out, the procedure has been govorn"mental"ized,
and it looks like we may just give cash instead.

has anybody gone thru the hoops to actually do this?

for anyone that hasn't looked into it lately, it requires setting up
a "treasury" bank account , then use that account to purchase the bond,
once you have the bond for 5 days, you can then transfer to the
recipient's "treasury" account. yup, this 3 mo old girl would require an
account set up in her name.... all before you can even print off
the "gift certificate" to give to the family.
unless i read their tutorial wrong, it just seems like it would deter
anybody from doing this.....

 

[smstonypoint]

First, congratulations to "Gramps."

Have the parents thought about setting up a 529 plan for their daughter? You could give cash/checks to the parents, who would then deposit the funds into the 529 account. They could invest in mutual funds within the account and likely achieve much higher returns than with savings bonds (EE or I). There are also tax advantages. See What Is a 529 Plan? and http://www.savingforcollege.com/grandparents/answer.php?grandparent_faq_id=2.

Steve

 

[Dutch445]

Steve that's a good question. Maybe at the party Sunday after the service
we'll have a chat about that. good idea

thanks

 

[bigtiller]

I think it was Clark Howard on HLN news that said, if $5000 were invested in the mutual funds at birth, that child could retire a millionaire. I have been patently waiting for a chance to do that but no grand kids yet. Lucky you, congratulations!!

 

[MossRoad]

First, congratulations to "Gramps."

Have the parents thought about setting up a 529 plan for their daughter? You could give cash/checks to the parents, who would then deposit the funds into the 529 account. They could invest in mutual funds within the account and likely achieve much higher returns than with savings bonds (EE or I). There are also tax advantages. See What Is a 529 Plan? and Grandparents Faqs on 529s - College Savings for Grandchildren.

Steve

Great advice. A 529 will yield a lot more money towards a college education for the child than savings bonds. We have two children. We didn't start the 529s until the 2nd one was born. Wish we would have sooner for the first one. Anyhow, $20 per week into a 529 = $1000 per year x 18 years = $18,000 towards college BEFORE you start figuring the interest in the investments in mutual funds. At 8% rate of return you could end up with over $40,000 by the time the child reaches 18. That may not seem like much in the future, but its more than you'll get in savings bonds.

 

[Soundguy]

i used to buy SB's have quite a few.. but if it is that hard to buy now.. I'll pass.

 

[smstonypoint]

Anyhow, $20 per week into a 529 = $1000 per year x 18 years = $18,000 towards college BEFORE you start figuring the interest in the investments in mutual funds. At 8% rate of return you could end up with over $40,000 by the time the child reaches 18. That may not seem like much in the future, but its more than you'll get in savings bonds.

Close enough for government work -- I came up with $41,808.36 from investing $20/week for 18 years (52 weeks/year) at an annual rate of 8% with weekly compounding.

BTW, the estimated cost of attending Harvard in 2013/14 is $59,950 - $65,150 (https://college.harvard.edu/financial-aid/how-aid-works/cost-attendance). I'm going out on a limb and predict that cost is going to be higher 18 years from now. You had better bump that $20 up a smidgen.

Steve

 

[Soundguy]

and hope you can get near 8%...

 

[Fossil Farm]

Yep, no more paper bonds. They are now paperless through TreasuryDirect. One has to setup an account on the website to purchase them now. The rate through May 2014 is 0.10 percent. I bonds are a better "deal" at 1.38 percent. Rates are set in May and November. Cash or 529 plan would be better. Something that is harder for the government to trace that she won't have to file paperwork on at some point in her life. We've been giving silver coins from Canada or Australia with animals on them just for something for them to look at and feel. Maybe they will get interested in coin collecting at some point. They can always be cashed in with no paper trail.

 

[nc redneck]

The only way to get old time paper I Bonds is through your tax return. I do it every year as paper I bonds are backed buy the US Treasury . Read the fine print on savings bonds online. They don't pay much and I only put a few thousand into them each year. I wish I had more of the $5000.00 one I bought back in 1998 and are paying 5% today. Good Luck

 

[Soundguy]

mine are e, ee and i

 

[kenmac]

Yep , the 529 is the best place to part the funds. Not savings bonds. I set up a 529 years ago through my financial advisor for my youngest son's college. He is in his 3 yr of a 4 yr degree and there should be plenty of $$ left when he finishes his 4 th yr. When I need money to pay tuition , I just contact my F A and he transfers $$ to my account.

 

[grsthegreat]

yeiks. i have never purchased any regular savings bonds, but have purchased I bonds. Those are simply purchased thru a bank. I bought a $5,000 I bond 2 years ago... had no issues what so ever. All my other bonds are Inherited, so all i had to do is re-issue them in my name.

Personally im happy with the interest the I bonds and the EE series bonds have made. The older ones i inherited are currently earning between 4.0 and 6.28% per year...depending on issue date. The newer I bonds vary between 3.89 and 4.6%.

Compared to 0.25% that Wells Fargo offers, bonds are great

 

[lilranch2001]

I have a few old EE bonds I have had for 20 years
This thread made me think to look up their value and interest rate.
Pathetic really
What is weird, they are all the same vintage, two of them earned 4% and one earned 1%

 

[Soundguy]

almost anything is better than bank interest nowadays.

 

[grsthegreat]

I have a few old EE bonds I have had for 20 years
This thread made me think to look up their value and interest rate.
Pathetic really
What is weird, they are all the same vintage, two of them earned 4% and one earned 1%

it depends on the value of the bonds and the year issued. Treasure direct has free software for tracking your bonds.

I dont think its pathetic in the least. My bonds have mads a great return...as some of them are nearly 30 years old. As an example, one bond my mom bought in 1984 for $50 out of a paycheck is now worth $221.28. She had bonds taken out of every monthly check. So did my father.

I think its a great way to save. the money isnt sitting there making you want to purchase an ipod or some other gizmo.

My parents lived on these investments for nearly 20 years after they retired. This was on top of pensions and other stock investments. They had a very comfortable retirement.

They are the ones that taught me to live debt free if i could. I have no debt...none at all. Its whats saved my business in these past lean years.

 

[timswi]

The problem I have with savings bonds (and I have a fair amount) is that you have to pay taxes on the interest.

You lend the government money then have to pay taxes on the interest received on the loan to them..

 

[grsthegreat]

The problem I have with savings bonds (and I have a fair amount) is that you have to pay taxes on the interest.

You lend the government money then have to pay taxes on the interest received on the loan to them..

errrr. you pay taxes on any savings interest. they report all interest income you earn.

heck, i sold some gold years ago, and i had to pay taxes on the profit i earned in the gold. that really sucked.

 

[MossRoad]

and hope you can get near 8%...

We've been averaging 26% per year for the last 2 years. 2008 kinda sucked eggs, though. :laughing: We got it back in two years and doubled it since then. We are more aggressive with the younger one's money. Each year they get closer to college we shift the investment from high risk towards lower risk. We're spread out between home, land, 529 college plans, Roth IRAs, 401k, Roth 401K, pensions, other investments, etc.... Some very aggressive investments and some safer ones. But while we're young we're being very aggressive. Some folks in our families live to be 100. If I plan to live to 85 and live to 100 I'm screwed. So I'm planning on 100 and if me and the wife croak, the kids will get a nice surprise. If we don't croak early, at least our funerals will be paid for. :confused3:

 

[MossRoad]

almost anything is better than bank interest nowadays.

Yeah. We just financed a used car through a different credit union. They are offering .13 percent interest on savings accounts. We're currently getting .10. So that's what? a whopping 3 cents more on every 100 dollars. 30 cents on a thousand and $3 bucks on $10,0000. Not worth the labor in paper work to switch accounts. Pathetic.