2007-01-12 07:56:38 · 5 answers · asked by VANESSMC99 2 in Business & Finance ➔ Investing
They are safe investments that provide some interest. Generally, the interest that they earn is tax free. But given your situation, it appears that your in-laws are purchasing them for the children because they want to give a gift that will be there several years from now instead of something that may get played with for a little while and then forgotten. By going the savings bond route, it is harder to redeem, as they generally must be held a certain period of time. This is probably why they go that route instead of cash, which is easy to gain access to. They seem to want to try to help prepare your children for the future, maybe by helping stash a little money away for a big expense in the future, perhaps a car or college or something along those lines.
2007-01-12 08:03:15 · answer #1 · answered by theeconomicsguy 5 · 0⤊ 0⤋
the EE bonds earn a small interest rate and continue to earn interest as long as they are not cashed. there is a tax advantage if you use these for educational expenses. The I-bonds are a bit better in earning interest and earn an interest rate that keeps up with inflations. Which are the best? well it depends on when you buy them and if inflation is low or high. The EE bonds are the traditional bonds that have a static interest rate and cost you half the face value. The I-bonds cost you the face value of the Bond ie. a $50 bond costs $50. There is a 3 month penalty if you cash them in early. What is nice about that is that discourages people from cashing them in on a whim. Perhaps you should look into a 529 plan for their education and have the grandparents contribute to that. They aren't the best in earning money but ALOT better than anything the kid will earn at a bank and for that I think it is a nice gesture and can help with the burden of school in the future. If you go to the US Savings bond site you can trak them all and convert them to electrinic bonds as well so you can have a snapshot whenever you want
2007-01-12 08:07:03 · answer #2 · answered by Domino 4 · 0⤊ 0⤋
The main advantage is that the taxes are defered on savings bonds until they are cashed. They are relatively safe more or less given the state of the U S government.
It is a tradition in many families to purchase savings bonds for the grand children. They can be purchased in relatively small amounts and as I said the interest is tax deferred and free from state and local taxes.
On the minus side of the equation, they do not pay very high interest rates.
2007-01-12 09:29:40 · answer #3 · answered by Anonymous · 0⤊ 0⤋
No benefit at all. My grandparents suffered horribly by buying them & holding them for yrs after WWII. Much lost interest/opportunity.
2007-01-12 11:15:17 · answer #4 · answered by vegas_iwish 5 · 0⤊ 0⤋
there is no benefit. these will not even keep up with inflation.
2007-01-12 08:39:11 · answer #5 · answered by Anonymous · 0⤊ 0⤋