U.S. Savings Bonds Question

debodun

debodun

SF VIP
Location
way upstate in New York, USA
I have a $25 and a $200 bond that will reach full maturity in 2027. The last time I checked their value was in 2021. Since then the $25 bond has only gone up 42¢ in value and the $200 bond the increase was about $4. That seems pretty slow value growth. Opinions on bonds as an investment?
 

Locking small amounts knowing the maturity date is far in the future my opinion is you would do better with a cash back credit card. Buy something needed @$25.00 with a 2% cash back you get an immediate 50cent return & have whatever you needed.
 
Plenty of current news on business media sites in a panic now as banks begin to fail. Especially ominous is the noise on bank and investment corporation vast holdings of low rated Mortgage Backed Securities especially all those involved in real estate assets I dislike most. Not the same as 2008 but involves the same greedy Wallstreet financial people that developed all manner of complex financial instruments even most of them don't adequately understand.
 

debodun said:
Since then the $25 bond has only gone up 42¢ in value and the $200 bond the increase was about $4. That seems pretty slow value growth.
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When inflation was low the bond interest rates were low too so yours probably locked in the old rates. But currently with high inflation the bond rates have risen, so if you bought one today you'd get a better deal (4 or 5 percent even!). Or, if the $200 had been put in inflation protected bonds you'd be earning over 9% interest automatically. I'm currently a believer in TIPS and i-bonds (due to the inflation)! I wonder why people aren't encouraged to keep their emergency funds in i-bonds to preserve the purchasing power of their money.

I've only started learning about bonds this past year. I'm so annoyed with my retirement-target-year investment that my IRA has, because even though the fund had money to put into bonds, instead of buying actual bonds they invested into bond-funds (which don't have the value protected). It seems to wipe out the whole point of having a percentage of assets invested in bonds.
 
I had a few US Savings bonds that I bought 20+ years ago. I cashed them in last year, and they were worth over twice what I paid for them, even after taxes. However, as an "investment" they weren't really very good.
 
US Savings bonds used to be easy to own and worked in your favor. We just cashed in one purchased (for 1/2 the face amount) in the early 1990's - it had finally stopped paying 4% interest and was well over the face amount. You used to be able to purchase them at any bank and give them as gifts.

Now, however, they have made it insanely difficult and you can only purchase one online. I was totally turned off, majorly frustrated and disappointed.
That said, if I were you, I would investigate a Certificate of Deposit at your local bank or credit union. Navy Federal just had a limited time offer for a 15 month certificate at 5%! I'm sure there are similar deals around. You can then, "ladder" them up - when their term is done, you can buy another one -or two - for another short term - thus grow your initial investment - yet still be able to access it, when needed.

I realize "banks" are all over the news right now but do some homework and find something you're comfortable with. They're not all bad!
 
I Bonds are paying close to 7%, but they were higher. I think I was getting close to 10% last year about this time? Not sure. I used to buy them and still do buy some and use them as a hedge against my losses.
 
Back '70s-80s, bought $100 bonds for $50 purchase price regularly at the bank. Hung onto them to maturity. Come 2002, guess it was, converted them to Treasury Bonds. Those matured just last year and had to turn them in. What I was not aware of was the differed interest on them while collecting twice-annual dividends over the years. IRS really bit me on the backside this year as a result. Ouch!!

That, said, I'd do US Savings bonds again. It was an easy way to save. Would check the fine print on the deferred interest option on T-bonds, though. Reading posts above, purchasing savings bonds are now in the too-hard-to-do box. Why?? I wonder?
 
When I went to cash some a few years ago, the bank teller didn't know how to do a paper bond transaction. She had to call the main office and even then it was like pulling teeth. Everything is done electronically now - they don't know how to do things "the old-fashioned way." I used to see commercials on TV for buying bonds. I don't see them anymore.

 
debodun said:
I have a $25 and a $200 bond that will reach full maturity in 2027. The last time I checked their value was in 2021. Since then the $25 bond has only gone up 42¢ in value and the $200 bond the increase was about $4. That seems pretty slow value growth. Opinions on bonds as an investment?
Click to expand...
EE type US savings bonds purchased before May 1995 had a guaranteed rate of 4% annual interest. Bonds issued after that followed a more complicated formula and have paid a lot less.

When were yours issued?

Right now I Bonds are paying pretty well because of inflation. Here's a site that explains the rates.
https://www.treasurydirect.gov/savings-bonds/i-bonds/i-bonds-interest-rates/

Many online banks are paying over 4% for CDs. Ally Bank pays 5% for 18 month CDs right now. Capital One has an 11 month CD at 5%.

Most brick and mortar banks offer lower interest rates on their CDs, but probably more than you're getting on your savings bonds.
 
I ended my working career in 2006 with about $17K in EE Savings bonds with varying maturity dates. Never paid any attention to them until it finally occurred to me that some had probably matured so there was no reason to hang on to them. Went through them and made a full list with serial #s (essential if they're damaged or lost). About half had matured with an average interest rate of 6%, which wasn't bad.

Turned them in at my bank and they deposited the funds in our account. Since they were paper bonds I had only paid 50% of par anyway. It was a nice little "bump" in our travel income that year.

The savings bonds are in a safety deposit box and we don't consider them part of our investment portfolio. Our portfolio is professionally managed by an independent CFP firm in a Balanced Risk profile of roughly 50-60% equities (funds) with the remainder in bond funds. They rebalance periodically so it varies. Since we're retired they manage it with tax considerations in mind.

We take distributions although we don't really need them, but over two-thirds of our distributions are tax-free so we don't need to worry about getting pushed up into a higher tax bracket.

Both equity and bond funds are a mix of global and domestic funds, along with a small percentage of REIT. We have a modest on-line savings account but essentially, if we needed anything more than $10K we'd take it out of the portfolio.
 

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