I have about $45,000 in EE and I Savings Bonds I've purchased over the last 10 or so years. I am now retired, age 50. The bonds have current rates of 3% (most of them) to a few of them getting 9%. My last child is in her last year of college (so I can cash in many tax-free). Should I cash in some or most of the bonds and put them in a CD or mutual fund? I don't need the money, I'm just looking to make a slightly better return.
2006-09-18 04:46:37 · 7 answers · asked by Amanda 3 in Business & Finance ➔ Personal Finance
Another criteria to consider is the impact on your tax this year. You will have to pay federal tax on year you cashed in. You might be able to exclude this income from federal income tax if you are qualified for Education Savings Bond Program.
To qualify for Education Savings Bond Program, your filing status must not be Married Filing Separate. These bonds must not be EE issued before Dec. 1989.
Qualified education expenses do not include room and board, only tuition and fees.
There are a number of other criteria that might affect (and reduce) the amount of benefits. The best thing to do is to ask your accountant, or someone who has a better handle on your overall financial situation.
If you do decide to cash in for educational purposes start with EE bonds issued after 1989 that pays the lowest rate, particularly those that are lower than the other investment alternatives you are considering.
I bonds are inflation adjusted, so I will leave those along. EE bonds that are paying 9% is very good return for almost no risk, so I will keep those as they are as well.
Of course you might decide to cash in even if the proceeds aren't used toward education because you find better investments for the money. Risks and returns analysis is too complex to discuss here, and unrealistic with more specific information.
Best wishes.
2006-09-18 05:26:41 · answer #1 · answered by JQT 6 · 0⤊ 0⤋
It's a good idea to get the mutual funds. These usually offer a greater rate of return. Especially the ones at such a low %, like 3%. That's not even really over inflation. This causes you to actually loose money in the long run. If you can don't go through the bank. They usually offer a lower rate of return because they have to make their money on the rest.
It's like this. They get 10%, 12%, and sometime 15% return on your money and guarantee you 3% - 5%, pending on the time of your investment. Cut the middle man out and collect your own money. Try a company call primerica, there great with investments and there's no middle man. They'll tell you everything you need to know. (www.primerica.com)
2006-09-18 04:54:53 · answer #2 · answered by vacera g 2 · 0⤊ 0⤋
Risk goes with reward. In terms of increasing rewards they are
Cash and Term deposits, Fixed Interest and Bonds, Property (excluding your home) then shares (diferent degrees in terms of developed economies, emerging markets etc). If you don't need the money, then there are tax issues to consider. Highest rates are Individual Tax Rates, followed by company tax rates, Seperannuation, then allocated pension. There is not much point in increasing the risk, hopefully increasing the return and seeing the benefits of your labour disappear before your eyes. Have fun in retirement.
"Life is not a race. So take it slower.
Hear the music before the song is over"
2006-09-18 05:01:57 · answer #3 · answered by Tom Cat 4 · 0⤊ 0⤋
Cash in anything that is not earning at least what a money market account earns which is now above 5%. The internet can give you current rates in your area. Until interest rates start to fall, look to go for the 1 year or shorter terms
2006-09-18 05:12:49 · answer #4 · answered by Richard L 1 · 0⤊ 0⤋
Quite candidly, you shouldn't be too specific on Yahoo. How much you have is none of anyone else's business. You don't want any con artists trying to get at you. Now, if some are getting 9%, you should keep them and keep them as long as you can! The ones that are paying a lower rate, I would cash in as CD's are paying close to 6% right now.
2006-09-18 04:54:29 · answer #5 · answered by brucenjacobs 4 · 0⤊ 0⤋
If you can cash them in tax-free (used for college) and there is no penalties (if you redeem them soon after buying, you forfeit some interest), it sounds like a good idea.
It really depends on your risk tolerance.
For the I Bonds, if you purchased them when the fixed rate was 3% or higher, I would keep those, as they should get a good rate.
2006-09-18 05:02:32 · answer #6 · answered by Jordan K 3 · 0⤊ 0⤋
MERRY ME!
2006-09-18 04:54:02 · answer #7 · answered by diamond maker 3 · 0⤊ 0⤋