Isn't this a post-o?

Approximate annual yield if bonds are held:
one year = 2.43%
two years = 2.84%
three years = 2.98%
four years = 3.04%

Using overall yield = [1.0325^(n-0.25)]^(1/n), where n = number of years
held.

"Rich Carreiro" <rlcarr[at]animato.arlington.ma.us> wrote
About EE bonds and the one-quarter year interest penalty--
- quote -

Frank <Frank[at]nospammindspring.com> writes:

- quote -

Make sure you understand the rules under which this can happen.
The bonds have to be registered a particular way and if your
income is too high you can forget about this.

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Key words -- *if held the 17 years*. The actual variable rate you get
is 90% of the current average of 5-year treasuries, and that's true
for the life of the bond. The guarantee only kicks in if you hold the
bond at least 17 years. At the 17-year mark, the Treasury will make a
one-time adjustment to bring the value of the bond up to face value if
it's not there yet.

Right now the rate is 3.25%. You're penalized 3 months' interest for
withdrawal before five years are up, which means that unless you hold
for more than five years, the approximate rate is 2.44%.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

sdlovell[at]aol.com wrote:
- quote -

EE Bonds can be used tax free to pay for education. If you are buying
the bonds for a child this could be a big advantage.

EE Bonds have a guarantee of doubling your money in 17 years which
amounts to a 4.17% annual yield if held the 17 years.

EE Bonds can be tax deferred. You can hold them for 30 years and
only pay tax as you cash them in. So depending on what your tax
bracket is now versus when you cash them you could save taxes.

It depends on what your purpose is for investing. If you are creating
an emergency fund, then you would want liquidity. If you are saving
for the long term toward a goal, e.g. pay for college tuition,
retirement,
etc. then you should be looking for investment yield, tax savings,
and degree of risk you are willing to take.

Long term an ING Direct acct isn't going to give you much for
your money. Buy the EE bonds in smaller denominations and then
if you need to cash one in you'll only suffer a penalty(if you haven't
held it for 5 years) on the small amount you need to cash in. Also
I believe you have to hold an EE bond a year before you can cash it
in at all. Again, Money Market vs EE depends on when you might need the
money.

Of course there are lots of other options other than a Money Market and
Savings Bonds. And all investments have risk. A Money Market fund might
be more liquid but there is also a small risk that you could lose
some principal. EE bonds you won't lose principal but there's a
penalty for early withdrawal. Both have inflation risk.

Frank

On Fri, 4 Mar 2005 08:43:39 CST, Rich Carreiro
<rlcarr[at]animato.arlington.ma.us> wrote:

- quote -

Regardless of how you purchase the bonds, one should keep detail
records, just in case. Their Savings Bond Wizrd program is great:
http://www.publicdebt.treas.gov/sav/savwizar.htm

"The Savings Bond Wizard ® helps you manage your savings bond
inventory on your PC. It's a downloadable program that allows you to
maintain an inventory of your bonds and determine the current
redemption value, earned interest, and other information. You can also
print your bond inventory, providing you with an important record if
you ever need to replace any of your savings bonds."

On a peronal note, I much preferred when one could charge saving bonds
on a credit card to get a rebate and get a real bond delivered instead
of TD.



Best Regards,
Bob Johnson
http://www.goldsheetlinks.com
http://www.coinsheetlinks.com

sdlovell[at]aol.com writes:

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There is none.

- quote -

Yes.

- quote -

Same as paper bonds. If EE, they are 85% of average five-year
treasury returns. If I, it's CPI-U plus the fixed over-inflation
kicker. It's all at treasurydirect.com.

- quote -

What do you expect? Look at interest rates over the past 20 years
and compare that to interest rates over the past few years. Of
course your wife has had an annual return of 5.4% over the past 20
while your son has had a 2.5%. If you bought paper bonds today,
you'd only be seeing around 2.5%, too.

- quote -

No.

- quote -

I'm not impressed with treasurydirect.com, and I'm not impressed
with the complete lack of a paper trail. You get no paper confirmations,
no statements, no nothing. God help you if there's a glitch on the TD
computers and they lose your account info.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

I recently opened up and account with TreasuryDirect and got a $1000
bond for my son's 1st birthday. I was doing some research for my
daughter's 1st birthday purchase to match and wondered what the
difference between the Series EE bonds sold on TreasuryDirect and the
paper bonds sold at most reputable finacial institutions really was.

1. Do the bonds on TreasuryDirect have the same guarantee as paper
bonds in that the bond will mature (double the purchase price) after 17
years?

2. When buying bonds on TreasuryDirect, what does the interest rate
follow? My wife has a few paper bonds from her first birthday that
racked up about 5.4% APY over the past 20 years... The bonds I've got
for my son are doing about 2.5% APY.

3. Will buying the paper bonds from the bank rather than on
TreasuryDirect in any way benefit my daughter when she cashes them in.

I did see a conversion account moniker for TreasuryDirect where one can
convert paper bonds to electronic bonds, but the site lacks
information... I didn't even know if, when I put in the $500 bond
amount on the initial purchase, I was actually buying a bond for $250
or one that will mature to $1000.

- quote -

amount you add... and at 2.6% APY on the ING Direct acct, the advantage
of having your money liquid is pretty nice.

Any enlightened souls out there willing to help?