Should I buy Series I or Series EE Savings Bonds?
Friday, September 24th, 2004
Categorized as: Yesterday's News (old post archive)
I have $15,000 sitting in a bank as a CD not even making 1.5 percent interest. If I was to transfer it all into Saving Bonds, which series would give me the most interest after taxes?
Tom’s response
If you moved your $15,000 into either Series EE or Series I Savings Bonds, you’d earn a higher rate and you’d pay no tax at all until you redeemed them.
I think Series I bonds are a much better investment than Series EE. My book, , includes a seven-page look at the pros and cons of I bonds and the reasons that I prefer Series I.
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Virtually every question about Savings Bonds has been asked and answered on this site multiple times. Use the search feature (see the box in the gray area near the top of this page) or the detailed menu on the lower part of the home page to find the information you're looking for.
Tom Adams
I am 30yrs old and I would like to purchase my first us savings bond? Which one would be the best for me?
Tonie - Historically Series I bonds have outperformed Series EE bonds. Series I is what I recommend.
Since inflation averages @ 2.5 percent, it would seem if the EE’s rate is 2.5% or more than the I bond’s fixed rate, the EE is worth considering.
Sam - Your math is correct, but as readers of my book learn, whether you look back 10, 25, or 50 years (or as far back as the data goes, which is 93.5 years), the CPI has always yielded more than 2.5% on a long-term basis.
Tom Adams
TOM, I HAVE BEEN BUYING SAVING BONDS FOR THE LAST 4 YEARS . LATELY C.D. ARE LOOKING BETTER THAN I BONDS . WHAT DO YOU THINK ? SHOULD I KEEP GETTING I BONDS OR INVEST IN CD’S THANKS , RICK
Richard - Savings Bonds and CDs have a lot of differences besides the interest rate. You need to look at your own financial situation in terms of the differences to determine which is best for you.
For more information, see my post Series I bonds versus bank CDs.
I want to start buying savings bonds for my new grandson, which is better, I or EE bonds? Also, is the initial cost at 50% of the face value? How many years until maturity?
Sarah - The interest rates on EE bonds are so low that the Treasury is just taking advantage of people like you.
You should invest in I bonds. The initial cost is the same as their face value and they pay interest for 30 years years. They aren’t guaranteed to double in value like EE bonds, but they are highly likely to double years before EE bonds will.
Tom Adams
I would like to start buying 100.00 savings bonds each month for our three children. I was told that if I buy a fifty dollar bond that in 7 years it will double therefore will be equal to 100.00. My children are 12, 10, 6 and this is the first that we have had any extra money to start saving for college. I figured that if we could double what we are paying for, the children would have a little savings for college. Is it true that in 7 years the bonds double?
Wendy - No, it is not true that EE Bonds double in 7 years - currently it takes 20 years. You’d probably be better off putting the money in a Qualified Tuition Program.
Tom Adams
What is the difference in series EE bonds and I bonds ?
Muriel - the information you’re looking for is here.
Tom Adams
The fixed rate of an I bond is .70% and the inflation rate 4.92% which totals 5.64% from 11/1/08 to 5/1/09, which is pretty darn good. But, in the future if the inflation rate is really low and you add the low fixed rate, won’t that make the bond a really bad investment?
Cathie - You are correct, however, everything is relative.
Today’s I bonds are better investment than the ones issued from May through October, which had a fixed rate of 0%. And inflation would have to extraordinarily low for these I bonds to ever pay as little as today’s EE bonds.
Tom Adams