Should I cash in my savings bonds?
by admin ~ May 30th, 2007 . Filed under: Personal Finance .
Gary D asked:
I have savings bonds and some of them are over 20 years old. Should I cash them in and put them into a money market or some other fund? GARY DOMINICUS
Caridad Szoka
I have savings bonds and some of them are over 20 years old. Should I cash them in and put them into a money market or some other fund? GARY DOMINICUS
Caridad Szoka
June 1st, 2007 at 1:34 am
Yep, and be sure to have withholding when you cash them in, or it could be unpleasant come tax-time. Or set aside money. They’ve changed the law on the interest rates paid after bond matures. Check it out. Can you receive more by placing funds elsewhere? Shop around. Consumer’s Reports just did some comparison shopping and found that bank interest rates varied quite a bit.
June 3rd, 2007 at 1:02 am
buy CD”s safe better interest
June 3rd, 2007 at 8:14 am
I would probably say no, unless you really need the money for and emergency. I assume you are talking about Series EE bonds.
They will continue to draw interest for up to 30 years.
Keeping the money in savings bonds will mean that you will never lose money. If you cash them, you will have to pay taxes on the interest before you reinvest in a money market or mutual fund that may lose money, and are not guaranteed by the government. Granted taxes on the interest of a $50 bond will not be that much.
You are accruing interest that you are not paying taxes on. You don’t pay taxes untill you cash them. Plus, if you use the money for something like education, when you do cash them, you still don’t have to pay interest. Or wait until retirement when your tax rate is even lower.
I don’t think putting the money in a CD is a very good idea. A 5 year CD is currently paying 3.49% according to BankRate.com. Then your money is locked in for 5 years and you pay taxes on the interest, and if you try and cash it early, you pay a penalty. 6 month CD’s are paying 2.75% interest.
Your series EE bond is probably paying 4 - 4.11 percent interest rate. You are not paying income tax on the interest currently. They are guaranteed by the government with no $100,000 limit. And you can cash them at any time with no penalty.
Check out: to see what the current value and rate are on the bonds that you have.
Good Luck