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Author: rkmacdonald Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76080  
Subject: Re: What to do with savings bond $$$$ Date: 12/18/1999 9:39 PM
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ChuckEdmundson wrote:
Cashing even one of these bonds would be a big tax hit since each is currently worth $18,000. What would be a Foolish course of action for us?

I think that you should not do anything until you make a plan for your retirement. Savings bonds may not generate quite as much return as other investments, but they do defer taxes on the gains and they are safe.

As you near retirement, most Fools recommend that you begin shifting some of your assets into bonds/cash equivalents until you have about five years living expenses saved up. The reasons for this is to cushion against an extended recession to avoid withdrawing living expenses from your equity investments when the market is down. The Savings Bonds could well represent all or part of the five years of living expenses. Obviously, in a perfect world, you would not begin to set aside this money until five years before retirement, but you already have it done.

Therefore, it may be reasonable to continue to hold the bonds (converting to H as needed) and invest very agressivly in growth equities with the entire remainder of your investment assets.

If the Savings Bonds represent more more than five years worth of living expenses, you might consider selling the excess (paying the taxes) and investing it in equities.

rkm
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