I know nothing about savings bonds. I recieved a 50$ series EE bond for joining something and I would love it if someone could tell me more about this???Thanks tonsCountess
Hello Countess,This website might help you out:http://www.publicdebt.treas.gov/sav/savinvst.htmNOTE: This information applies only to EE bonds issued May 1997 and after. Investors have to know only 3 things to understand how their bonds earn interest and grow in value... Series EE savings bonds bought on or after May 1, 1997 will earn interest based on 5-year Treasury security yields right from the start. The new rate for EE bonds will be 90% of the average yields on 5-year Treasury securities for the preceding six months. EE bonds will increase in value every month instead of every six months. Interest is compounded semiannually. A 3-month interest penalty will apply to bonds cashed before five years. This rewards longer-term bond holders who then benefit from higher 5-year rates over the full life of the bond. Here's how it works: If you cash a bond before it's five years old, you give up the last 3 months worth of interest. For example, if you buy a bond in May 1997 and cash it 24 months later in May 1999, you get your original investment back plus 21 months of interest. The value of the bond would be based on the announced rates applied over the 21-month period from May 1997 through February 1999.Series EE bonds now earn interest much like other savings products available in the marketplace. When you team up these improvements with the many other features of bonds -- safety, ease of purchase, and tax advantages -- EE bonds are truly unique! Easy to Understand Rates announced each May and November are the annual rates that apply to bonds for those 6-month earning periods. For example, the 6-month earning period for a bond issued in May is from May through October; for a bond issued in June, it's June through November. Interest Earning Life Series EE bonds earn interest for 30 years. This long life lets investors use savings bonds for truly long-term goals like education and retirement. Tax Advantages Interest earned on your Series EE bonds is exempt from State and local income taxes. You can defer Federal income tax until you redeem the bonds, or they stop earning interest after 30 years. This means you can plan ahead and choose when might be the best time to realize income for tax purposes. And, since your interest isn't taxed until you redeem a bond, your savings grow faster. There are also special tax benefits available for education savings. If you qualify, you can exclude all or part of the interest earned on Series EE bonds from income when the bonds are redeemed to pay for post-secondary tuition and fees. For more information see Savings Bonds for Education. Face Value/Denomination Series EE bonds are sold at half their face value and are available in denominations ranging from $50 through $10,000. Because EE bond interest is pegged to market rates every six months, there's no way to predict when a bond will double in value. In the unlikely event that rates are so low that a bond doesn't double in value by the time reaches original maturity, Treasury will make a one-time adjustment to double in value at that time. Liquidity You can cash Series EE bonds with issue dates of January 2003 and earlier any time after six months. Bonds with issue dates of February 2003 and after can be cashed anytime after 12 months. Most investors plan to hold bonds for longer term goals, yet they know they can get their money with interest if they need it. Of course, if a bond's redeemed before five years, a 3-month interest penalty applies. e
Hi E,Thanks a bunch.So do you know what the interest rates are? :)Countess
So do you know what the interest rates are? :)If I'm reading that website right it's 2.66%. I have downloaded and do use the Savings Bond Calculator that they provide (for free) and it will keep track of how much interest you've earned, when to cash it in or trade it in, etc. I love it.e
nevermind I just found it.well 2.66 is better than my ING is doing right now :)
well 2.66 is better than my ING is doing right now :) EE bonds will generally be better than the ING account (it would take a very odd interest rate environment for this not to be the case) before you take the tax advantages into account. When you add in the fact that the interest on EE bonds is Federal-tax deferred and state-tax exempt, you almost always end up with a better investment...if you can afford to wait the year until they can be cashed.Just don't forget the 3 month penalty if you sell before the bond is 5 years old...ACME
Before you tranfer your liquid assets from ING to E-Bonds, keep in mind you can't touch E-Bond investments for one year after you invest in them! Also, I-Bonds might be a better choice for shorter term investments (1-5 years), since they're paying such a high (initial) rate currently (4.66%). Nick
Thanks Nick,My husband who isn't finacially savvy was impressed with the thought of asking for a few bonds for our kids for college since it will be 13 years for the oldest and 17 for the baby....I'm looking into cds now as well, but I'm not sure of the minimum on those...Honestly, I'm just thrilled my husbutt :) is thinking about saving money instead of spending it Countess
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