Comments on: I bond fixed rate held at 1.40%; EE 3.60%

by: Tom Adams

Thu, 14 Dec 2006 14:52:34 +0000

Monica - the only choice is between EE and I bonds. Historically I bonds have outperformed EE bonds.

You need to get the registration correct if you want to use these for your son's college expenses. I recommend you read my page on the savings bond college education deduction.

by: Monica

Wed, 13 Dec 2006 19:15:16 +0000

I want to buy bonds today to save for my son's college expenses, but don't know which kind to purchase. Any advice? He is 11 years old. Thanks!

by: Dan

Wed, 01 Nov 2006 21:34:14 +0000

John,

Basically, you're getting 0.4% additional interest in exchange for (1) an extra year of being subject to the five-year early withdrawl penalty and (2) a sacrifice of three months of interest at the most recent lowly 2.01% rate. That tradeoff will pay off for you more the longer you hold the I-bonds.

The sacrifice to upgrade your I-bond is so small that, unless you know you're going to need to redeem the money within a year or so, I'd suggest you make the exchange.

by: John

Wed, 01 Nov 2006 19:35:52 +0000

Tom,

I was new to I bonds about this time last year and bought about $500 or so during the 6.73% composite (with 1.0% fixed rate). Is it worth going to the trouble as these bonds turn one year old of cashing in and reinvesting at the higher rate?

by: Dan

Wed, 01 Nov 2006 15:51:55 +0000

Ah, I knew I should have waited one more day for that purchase! Oh well, worse things have happened than 2.41% for the next 5 months I guess…