2006-07-20 12:35:11 · 7 answers · asked by Garland Red Neck 1 in Business & Finance ➔ Investing
Used to be HH bonds, Now EE and II bonds.
You pay 50 for 100 at maturity: or 100 for 200 at maturity: or 250 for 500 at maturity: or 500 for 1,000 at maturity. Maturity generally being 30 years. With the II bonds, the interest re-sets with inflation.
They are exempt from state and local taxes, and if used for education, also exempt from federal taxes.
The return is not great. Currently in the 5% range. So longer term, one might consider a Good mutual fund, like Investment Co. of America (American Funds). However, they are great for gifting. You'll need the child's social security number.
This is how I sent my 3 children to college. With EE bonds, through a payroll deduction plan.
Go to Google and type in EE bonds and you'll get many pages of great information. Good luck!
2006-07-20 15:29:49 · answer #1 · answered by jalfredprufrock 2 · 0⤊ 0⤋
Savings bonds used to be a good investment during WWII. They still can be if you get enough of them.
A savings bond is a certificate that you purchase from the government for a certain amount. The government uses that money to help pay debts while it matures. Say you pay $10 (not sure of the purchase price, just an example) for a $50 savings bond. The bond will be worth $50 dollars after it matures, which is 30 years right now. So during that 30 years, the government is really paying you for borrowing the $10. I worked at Boeing for a few years and bought about 20 of them. Don't remember how much I paid, but I think it was only $10 a piece. They are all $100 bonds. So for a $200 dollar investment, they will be worth $3000.
I hope that helps. And yes, they are a great bday present. My son got some for his bday.
2006-07-20 19:48:47 · answer #2 · answered by Twisted Maggie 6 · 0⤊ 0⤋
I'm not exactly sure how they work - but I think if you buy a $50 one - in 7 years it's worth $100 - not really sure.
My son is 2 and has gotten many savings bonds - I think they are a great idea!! I would rather this than another toy - how many toys can a 2 year old. So, yes, I think they are a great b-day gift idea.
2006-07-20 19:40:43 · answer #3 · answered by hotmomma 4 · 0⤊ 0⤋
The other answerers for this question so far have given you good information. The only thing I would add is that the difference between mid-term and long-term interest rates is not very much right now...so if you have an option, choose the shorter bond maturity instead of the longer one.
2006-07-20 20:29:35 · answer #4 · answered by Michael R 1 · 0⤊ 0⤋
It isn't the greatest "investment" in the world, but it is a GREAT gift for a child as the interest if cashed for paying for higher education is not taxed.
Also, I see all my cousins kids get so many toys they never play with or just destroy, I'd rather not throw my $ away like that. SO I invest in their future
2006-07-20 21:24:56 · answer #5 · answered by Nick C 3 · 0⤊ 0⤋
I would also add that the current terms of the I series bonds are better than the EE series, which Congress recently monkeyed with to limit the cost to the government.
2006-07-20 21:38:23 · answer #6 · answered by OPM 7 · 0⤊ 0⤋
after taxes and inflation they pay basiclly nothing, you'd dp better with a gold coin, at least you could put it on display.
2006-07-20 22:12:46 · answer #7 · answered by Michaelsgdec 5 · 0⤊ 0⤋