As you can read here, Savings Bonds are one of those ways, but you can't be sure when you start saving whether you'll qualify for this when she's college age. Your income may be too high by then.

Many states have programs called qualified tuition plans or QTPs that avoid that problem, although they may have others. I'm not an expert in this area, but you can get more information with a Google search - include the state you live in like this: "qualified tuition plan" "North Carolina"

To directly answer your question, it's not exactly true that a Savings Bond has a "maximum potential". It's true that EE bonds double in value after a certain number of years (the number depends on when they were issued, currently 20), but they earn interest before and after that. And I bonds don't have that feature anyhow.

So all you need to know really is that you can't cash a Savings Bond until it's a year old and if you cash before it's five years old you lose the most recent three months of interest. This penalty is already taken out when you look up a Savings Bond's value, so there's no penalty on top of what our calculator says your bond is worth.

So, in my opinion, if Savings Bonds work for you as a good way to save for college tuition, then they don't become impractical until after your daughter is in college. But make sure you read that page I linked to above, as there are a lot of details you need to get right to get the tax deduction for using Savings Bonds for college.

Tom Adams

There's a $5,000 annual investment limit on Series EE bonds, but you're nowhere near that yet and there are easy ways to expand that in your situation.

Historically, Series I bonds have done much better than Series EE.

Tom Adams

Tom Adams