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If the tax isn't deferred, the HH bonds aren't that great a deal.
Currently they pay 4%. However, the ones we have resulted from
EE bonds on which no tax had ever been paid. If it were paid, about
1/3 of the value of the bonds would go to Uncle. So accepting
4% on the full amount is the same amount of interest as getting 6% on
a different investment--in the current rate environment, not that
shabby. But if there weren't tax to pay, you can do better with
corporates or if you are in a higher bracket, munis.
Will we live to see the HH bonds mature? So far, not a big problem.
We can cash them in at any time, of course, forfeiting the interest
since the last pay date.
Best wishes, Chris
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