Comments on: Harvard prof suggests reinventing Savings Bonds

by: Tom Adams

Mon, 10 Jul 2006 04:58:52 +0000

Mario - it's a good question and you didn't speak too soon. The older variable rate Savings Bonds will earn 4.11% during their six-month rate period that begins after May 1, while the new fixed-rate bonds are at just 3.70%.

I still think the EE could be an interesting opportunity someday, but the fixed-rate would have to be 6% or higher, so we're not there yet.

by: Mario

Mon, 10 Jul 2006 04:24:40 +0000

Sorry I spoke too soon! Variable EE @ 3.61 and new fixed at 3.70. First time the new is higher. Sorry for going off-topic.

by: Mario

Mon, 10 Jul 2006 04:19:49 +0000

Here is what would increase the demand for savings bonds … increase the rates they pay to match other available market rates!

While we're at it … Tom, back when the EE bond was changed to fixed for its life, the conclusion was that it's a bad investment in a rising rate environment. Now that the Fed is almost done, is it good instead? (But I believe it's tied to the 10 yr bond which doesn't correlate much with Fed action?) The current EE's still pay much less than my variable EEs based on 90% of the 5 year bond …

by: Weiwen

Fri, 07 Jul 2006 03:21:17 +0000

To further test the concept, he and his team offered filers the option of investing part of their refunds in savings bonds at fifteen H&R Block offices north of Chicago in March and April 2006. This pretest was designed to pave the way for more substantial experimentation this coming year. "It's too small a sample to draw conclusions, but initial indications would suggest that savings bonds might be as attractive to as many savers as on-site funding of an IRA," says Tufano, who plans to return for more on-the-ground testing in early 2007.

Savings Bonds would be a much better investment than those money-market IRAs that H&R is getting sued by Spitzer over.