Comments on: Should I Cash My Savings Bonds?

By: MMA Bart

MMA Bart — Fri, 05 Jun 2009 20:34:49 +0000

I think what Micheal said above is important – don’t sell your I bonds. I have several and they are a solid investment. As for other bonds – I agree in part. If you’re in debt, it makes sense to pay down a 25% APR credit card bill instead of fighting to make 2-3% in bond.

By: Carnival of Debt Reduction » Blog Archive » Welcome to the Carnival of Debt Reduction

Mon, 18 May 2009 05:45:54 +0000

[...] The Happy Rock is wondering about cashing in savings bonds. [...]

By: Sue

Sue — Wed, 13 May 2009 22:28:42 +0000

Hi Happy Rock,
I recently recommending selling savings bonds with some caution.
http://motherhood101aplus.blogspot.com/2009/03/savings-bonds-that-have-matured.html
“EE and I savings bonds earn interest for 30 years. HH savings bonds earn interest for 20 years.
Please check http://www.treasurydirect.gov prior to cashing in your savings bonds. Click on the get started link. You can also check when the next accrual period is on the bonds. You still may decide to cash the savings bonds in but try waiting until the next accrual period has passed.
An EE bond issued in 1984 for $50 (face value)would be worth over $90. The bond still accrues interest after the maturity date.”

By: Shibuya

Shibuya — Wed, 13 May 2009 09:10:27 +0000

I have always thought that CDs were better than savings bonds anyway. Right now with the interest rates being what they are, I can’t recommend not casing them in. Thanks for this information.

By: The Happy Rock

The Happy Rock — Wed, 13 May 2009 03:45:58 +0000

@Michael and brainy – My point is that selling bonds regardless of what interest rate they have is still a most likely a good idea. Most people hold bonds and pay a lot more than 5% interest on debt, so mathematically selling bonds usually makes sense. Now if you don’t have debt and you have 6% bonds, I might reconsider.

@Neil – I agree and that doesn’t even factor in the non money side to debt destruction like, freedom, lower stress, etc.

By: Neil

Neil — Tue, 12 May 2009 11:57:07 +0000

I agree with this advice, and it should apply to any sort of investment that you hold (i.e. you should be constantly reviewing its performance). In relation to paying off debt, it is very hard to justify any investment other than your pension if you are paying interest on debt. Once the effect of paying tax on earnings from your investments is taken into account it is very unusual for an investment made to outperform a debt reduced.

By: brainy

brainy — Tue, 12 May 2009 10:12:57 +0000

I’m going to have to disagree on this one.

It all depends on when you bought them — I’ve got I-bonds that are earning over 6% right this minute. There’s no way I’d cash those out now!

At the same time, like you mentioned, the rates right now are terrible so I’m certainly not planning or suggesting that anyone should invest in them right now (at least until the next rate update in November.)

By: Michael Harr @ Wealth...Uncomplicated

Michael Harr @ Wealth...Uncomplicated — Tue, 12 May 2009 04:28:26 +0000

Whoa, whoa, whoa…careful not to sell I Bonds from years past that pay a healthy fixed rate. Even though they won’t yield much in the near term, they’re an excellent long-term instrument to fill out emergency funds or for cash allocations in longer-term portfolios. While you might get a few percentage points over the next six months or year (depending on when inflation returns), you’ll likely be better off holding onto the bonds over the next several years.

As for the other bonds…you bet, sell ‘em all. They have horrible yields and better metrics can be accomplished buying treasuries or corporate bonds (these have been very attractive all year long).