Would it be wise to invest in savings bonds?
by admin ~ March 6th, 2008 . Filed under: Investing .
I am me and no one else asked:
I remember my grandparents buying them for us as kids… and we even still have a few…. but I have just now started in the workforce out of college, so I just now have also started saving for retirement (which I don’t plan to do for a good 30 years or so)…
I remember my grandparents buying them for us as kids… and we even still have a few…. but I have just now started in the workforce out of college, so I just now have also started saving for retirement (which I don’t plan to do for a good 30 years or so)…
But with the economy as volatile as it is…. if savings bonds would be a good thing to also invest in in addition to my 401k and the retirement system that my city has us pay into…
Clark Busbee
March 6th, 2008 at 6:24 am
Savings bonds used to be a great investment, but in the 1980’s they ruined them changing the terms on the payout. They are a very poor investment now.
March 8th, 2008 at 6:51 am
Government savings bonds, while guaranteed, don’t make enough to make it worthwhile as an investment. They may not even keep pace with inflation.
While not a bad choice for an overall portfolio, they should not be more than a very small part of a relatively young person’s (under 30) 401(k).
However, the government needs money. As things are headed, the US government’s credit rating is going down, so selling savings bonds may be one of the key ways (outside of taxation) for the government to raise the money it needs.
March 11th, 2008 at 12:06 pm
For safety, yes, but not so much for retirement.
The most yield you would get from them is 4%.
So its according to what you want it for.
March 12th, 2008 at 3:29 am
Not at this point, only because their rate of return is so low.
Your grandparents might remember the days before FDIC insurance, and so see savings bonds as the safest savings method. In reality, there’s no difference between an account with FDIC (or NCUA) insurance and a savings bond, except for the rate.
You can get better rates on a 12-month CD than on any savings bond right now.
As someone right out of college, your best bet is honestly the markets right now. Make sure you first have funds set up to cover your living expenses (six months’ worth is a good rule), then put into your 401(k) or 403(b) to get the company match, then finally into your IRA.
If you have money after that, consider buying shares of quality dividend-paying companies.