Source
r/personalfinance•
RandomUsername55

EE Bond Advice: Switch it up or let it ride?

Where do I start with this? Well I guess here's some background:

From 2002 to 2005 I received various $100 EE bonds as gifts from relatives and until recently I've just let them sit there without any interest in looking them up. Now that I'm more educated in PF (thanks mostly to all of you here) I've grown more curious and investigated them more thoroughly.

In total, I received 10 EE bonds over the years (summary of bonds/interest rate below) and I can't help but feel that the interest rates are terrible considering my Ally HYS earns more than my highest yield EE.

My question is this: should I cash out these bonds and use them for something more viable (increasing my emergency fund/Roth IRA/arbitrary opulence/etc.) or should I allow these bonds to continue on their current growth?

I'm sure there's something I'm missing here, so please forgive my igorance. I'm still learning!

Thank you all in advance!

Den | Cost | Interest | Rate | Value | Final Maturity | Issue Date

$100 | $50 | $11.96 | 0.81% | $61.96 | 04/2035 | 04/2005

$100 | $50 | $11.96 | 0.81% | $61.96 | 04/2035 | 04/2005

$100 | $50 | $13.08 | 0.63% | $63.08 | 07/2034 | 07/2004

$100 | $50 | $13.12 | 0.63% | $63.12 | 06/2034 | 06/2004

$100 | $50 | $14.72 | 0.81% | $64.72 | 09/2033 | 09/2003

$100 | $50 | $14.80 | 0.63% | $64.80 | 08/2033 | 08/2003

$100 | $50 | $15.76 | 0.63% | $65.76 | 02/2033 | 02/2003

$100 | $50 | $15.76 | 0.63% | $65.76 | 02/2033 | 02/2003

$100 | $50 | $17.08 | 0.63% | $67.08 | 07/2032 | 07/2002

$100 | $50 | $17.08 | 0.63% | $67.08 | 07/2032 | 07/2002

$1000 | $500 | $145.32 | $645.32

Edit: Trying to get the formatting right

Posted Feb 10, 2013, 7:26 PM UTC · edited

37
grosshobit•

EE bonds issued during those dates were at rates of 3.5% +

http://www.treasurydirect.gov/indiv/research/indepth/ebonds/res_e_marketbonds.htm

1
science4sail•

It says on the site that EE bonds issued between 1997 and 2005 have variable interest rates, so OP should be correct.

2
grosshobit•

Ah, got you.

1
RandomUsername55OPUnited States•

The rates are per treasury direct as of 5 min before posting

1
[deleted]•

[deleted]

1
RandomUsername55OPUnited States•

Wow, great info.

With that information, I think it's completely viable to hold onto them at least until April 2025. About that time, I'll have to bust out the old Net Present Worth calculations and see what makes sense investment wise.

Thanks again!

-1
lightcloud5•

And if you buy EE bonds now, they are guaranteed to double in value after 20 years, which is about a 3.5% effective rate.

But if you redeem it at say, 19 years, then you don't get the guarantee, so the real question is how high (or how low) inflation will be in the 20-year period.

1