Comments on: Cashing In Savings Bonds Early: Is It Worthwhile? http://www.thesimpledollar.com/2006/12/11/cashing-in-savings-bonds-early-is-it-worthwhile/ Simple, applicable personal finance advice for the modern world Sat, 21 Nov 2009 22:03:21 -0800 http://wordpress.org/?v=2.8.4 hourly 1 By: Dunstin H http://www.thesimpledollar.com/2006/12/11/cashing-in-savings-bonds-early-is-it-worthwhile/comment-page-1/#comment-75517 Dunstin H Sat, 22 Sep 2007 20:57:08 +0000 http://www.thesimpledollar.com/2006/12/10/cashing-in-savings-bonds-early-is-it-worthwhile/#comment-75517 So this is an old post. But I did a Google search with this exact question in mind. Sure, I am making a stable 3.2 - 3.6% interest with my Bonds, but is probably lower than inflation right now due the recent Fed rate cut. So if I look at it from that angle, I am losing money with my savings bonds. Contrarily, if I cash in my bonds and deposit them to my emergency account (HSBC Direct - 5.05%), I will make a higher interest rate, the asset will be more liquid, and it will be FDIC insured (once again, backed by the government). I think it is a good idea to scrap bonds and go with high yield FDIC insured savings accounts. So this is an old post. But I did a Google search with this exact question in mind. Sure, I am making a stable 3.2 – 3.6% interest with my Bonds, but is probably lower than inflation right now due the recent Fed rate cut. So if I look at it from that angle, I am losing money with my savings bonds.

Contrarily, if I cash in my bonds and deposit them to my emergency account (HSBC Direct – 5.05%), I will make a higher interest rate, the asset will be more liquid, and it will be FDIC insured (once again, backed by the government).

I think it is a good idea to scrap bonds and go with high yield FDIC insured savings accounts.

]]> By: Mike http://www.thesimpledollar.com/2006/12/11/cashing-in-savings-bonds-early-is-it-worthwhile/comment-page-1/#comment-986 Mike Tue, 12 Dec 2006 23:52:21 +0000 http://www.thesimpledollar.com/2006/12/10/cashing-in-savings-bonds-early-is-it-worthwhile/#comment-986 There is one consideration in favor of savings bonds -- the interest is tax-deferred until the bond is cashed. On that basis, I keep my emergency fund in savings bonds, on the theory that if I need to tap the fund I'd be in a lower tax bracket (such as if I lost my job and couldn't find another right away). Does that advantage outweigh a difference between 3.25% and 5%? Probably not. In my case, I have some I-bonds where the fixed part of the interest rate is in the 2-3% range, to which the inflation adjustment is added. Right now I plan to keep those until needed or I retire, whichever comes first. There is one consideration in favor of savings bonds — the interest is tax-deferred until the bond is cashed.

On that basis, I keep my emergency fund in savings bonds, on the theory that if I need to tap the fund I’d be in a lower tax bracket (such as if I lost my job and couldn’t find another right away). Does that advantage outweigh a difference between 3.25% and 5%? Probably not.

In my case, I have some I-bonds where the fixed part of the interest rate is in the 2-3% range, to which the inflation adjustment is added. Right now I plan to keep those until needed or I retire, whichever comes first.

]]> By: MoneyFwd http://www.thesimpledollar.com/2006/12/11/cashing-in-savings-bonds-early-is-it-worthwhile/comment-page-1/#comment-960 MoneyFwd Tue, 12 Dec 2006 14:38:29 +0000 http://www.thesimpledollar.com/2006/12/10/cashing-in-savings-bonds-early-is-it-worthwhile/#comment-960 I think I would cash it in and put the money in a high-yield savings account, or possibly a CD if you can find one that you can start with just $200 or so. I think I would cash it in and put the money in a high-yield savings account, or possibly a CD if you can find one that you can start with just $200 or so.

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