Updated on 07.30.14

The Ups and Downs of Giving Savings Bonds as Gifts

Trent Hamm

With Christmas approaching, my wife and I once again were faced with the difficulty of buying a cadre of Christmas gifts for my nieces and nephews. We often have particular trouble with one of my nephews, who is a middle child. He generally says that he doesn’t want anything for Christmas and, when forced, he asks his older sister what she wants for Christmas and repeats that.

After some abysmal gifts in the past few years (things he didn’t like, plus one thing he did that his parents absolutely refused to let him have), we are considering buying him a savings bond for his Christmas gift. In considering it, we are weighing the positives and negatives of such a gift.


It will help him out in the future. It’s not useful to him now in any way, but in a few years when he’s looking at college, it could buy a textbook or something. If he holds on to it until after college, it could help him furnish his home or something else. That’s better than a gift he’ll likely forget all about the day after Christmas.

It’s an investment. It will continue to grow in value over time, even if it doesn’t match that of a strong mutual fund or anything. He can just keep it somewhere safe and when he needs it, it will be worth more then than it is now.

It’s educational. If done well, a gift of a savings bond can be quite educational. They can teach the power of interest and also demonstrate how investments work in a simple way that children can grasp. I particularly like using the savings bond calculator to see how much a few savings bonds I received in my childhood are worth – and sort of worried that some of them are about to stop earning money, because it means I’m getting old.

It’s easy. It is quite easy to buy a gifted savings bond online – a few clicks and it’s done. I could also stop at my local bank branch and do the same thing if I so desired. This means no long searches for a particular item and no marching through malls looking for a gift – just click, click and it’s done.


It’s easy. It’s an unexciting Christmas gift that is about as expected as can be; even Kiplinger’s pokes a bit of fun at the tradition. On Christmas morning, there are many more fun things to open than a savings bond, particularly for a child.

In short, we’re leaning towards buying the savings bond. Even though it’s boring, it reflects values that we care about now: careful money management and so forth.

Loading Disqus Comments ...
Loading Facebook Comments ...
  1. My husband and I buy savings bonds for our niece and nephew for Christmas. At this age they really don’t know what we give them, one is an infant the other is a toddler. We have considered giving them traditional gifts as they get older. Children receive so many gifts on Christmas day that they simply can’t enjoy them all. Rather than giving them yet another toy they’ll soon outgrow we give them savings bonds and usually a $2 – $5 toy just so they have a gift to open.

  2. bluntmoney says:

    He might or might not appreciate it now, but he sure will when he’s older.

  3. Is there some game (video or otherwise) that could be both entertaining and educational about money? I think I read something about the Sims 2 having an expansion pack or something. You might be able to accomplish both fun and financial learning.

    If he’s into baseball and statistics, I’d recommend a copy of Baseball Mogul, where you play owner and GM of a baseball team. There’s the finance aspect as well as the game play of building a great team through trades and development.

  4. Why not consider a mutual fund?

    Jonathan Clements of the Wall Street Journal did an article about this topic back in June. I don’t know what your budget is but the AARP Aggressive Fund only requires $100 to get started.

    Just an idea.

  5. Lael says:

    I received some Savings Bonds as a child – I remember my Mom and Dad showing them to me but have I ever seen them as an adult? No (and I’m 44 so they’ve had plenty of years to give them to me). They’re probably buried in some box somewhere in my parent’s home. Just remember, you have no control over what the parents do with them.

    However, even so, I’ve decided to open a Sharebuilder account for my goddaughter (have my friends open it for me to deposit money into and buy what I ask them to)- whether or not that will work out better for her we’ll see in the long run.

  6. Gordon says:

    I want to buy savings bonds for a friend of mine. What if I don’t know her SSN, will it matter?

  7. Trent Hamm Trent says:

    You need to know her SSN to give a savings bond as a gift.

  8. Mitch says:

    I have always enjoyed saving money and learning about saving and investing, but I always hated the savings bonds that I got as prizes for winning essay contests and other things.

    Here is why:
    1. The value listed on the piece of paper was the amount it would be worth in 30 years, NOT now. A total setup for disappointment.

    2. The $25 they spent on the bond would have meant a LOT to me in high school, but by the time they reached face value I was making over $100k a year and $50 was what I’d blow on dinner without even blinking an eye. I cashed them in not because I needed the money, but because I was annoyed by having to keep track of the pieces of paper.

    3. It’s easy to lose that piece of paper, especially during the years you’re talking about. You don’t have a safe or something similar to put papers like that away in when you are 10 or 12 or even 24 years old.

    4. Taxes. Some of the bonds I got for essays and the like were taxable. If I’d cashed them in as a kid when I really could have used the money I wouldn’t have paid any taxes. Having cashed them in when I was an adult and married to someone else also making good money, I paid heavily.

    My recommendation is giving cash or a gift card. If you REALLY like the kid, give then that then go shopping with them and help them learn to spend well, think about the value of things they are considering, think about saving it for something they’d enjoy more later, etc. Some kids will blow it on something silly, but some will really think about it and consider the differences in values of different options. Quite the learning experience.

Leave a Reply

Your email address will not be published. Required fields are marked *