Series I versus Series EE
Tuesday, July 27th, 2004
Categorized as: Series EE US Savings Bonds • Series I US Savings Bonds
Where can I find comparisons on how Savings Bonds are doing against one another, for example, should I get Series EE or I bonds? And how long does it take for these bonds to mature or reach their face value. For example, a $100 dollar bond purchased for $50, how long until it is worth $100? A cashier at my bank told me they were now taking up to 21 years to reach face value. Is this correct?
Tom’s response
My book, , has a complete analysis of the Series EE vs Series I question, which is too detailed for an email. The analysis suggests Series I bonds are the better investment.
Series EE bonds are purchased at one-half face value ($50 for a $100 bond) and the Treasury guarantees they will double in value in 20 years. This represents a guaranteed interest rate of 3.5% if you hold the bond for the full 20 years.
Series I bonds are purchased at face value and don’t have a double-value guarantee. Each issue of I bond has a fixed base-rate and also earns the current rate of inflation, which is adjusted every six months. If these rates average more than 3.5%, an I bond will double in value in less than 20 years.
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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
If the EE doubles in 20 years guaranteed, is it still possible to double faster, or be worth more than double in 20 years?
Also, am I understanding this correctly. If we go into a deflationary time, then the I bond is basically only making what the current fixed rate is, right?
Chris - older EE bonds could theoretically double faster, but the ones issued today cannot.
If deflation is severe enough, it can also wipe out the fixed rate of I bonds, although the total rate can’t go below zero.
Tom Adams
I have some Series I Savings Bonds issued 10/01 and some Series EE Savings Bonds issued 12/02. How can I find out when they reach their maturity dates and when they’ll be worth their face value?
Debbie - the I bonds were worth their face value on the day they were issued. That vintage of EE bonds reaches face value after 17 years. Both stop earning interest 30 years after issue.
MY FATHER GAVE ME SOME SAVINGS BONDS WHEN I TURNED 25 YEARS OLD. FIVE YEARS LATER HE SAID HE NEEDED THEM BACK BECAUSE HE HAD RAN UP HIS CREDIT CARDS, AND HE WANTED TO PAY THEM OFF. BOTH OF OUR NAMES ON THE BONDS. I TOLD HIM THAT I AM NOT GOING TO RETURN THEM TO HIM, HE HAS TOLD ME HE IS GOING TO FILE A MISSING / LOST CLAIM ON THE BONDS AND THAT THEY WOUULD BE RE-ISSUED AND MAILED TO HIM. SHOULD I WORRY ABOUT THIS ? I HAVE THE BONDS IN A SAFETY DEPOSIT BOX, IF HE FILES A LOST CLAIM AND THEY ISSUE HIM NEW BONDS, WILL THE ONES I HAVE BE NO GOOD? PLEASE LET ME KNOW.
THANKS
COREY
Corey - yes, in theory he can do that and if he did the bonds you have would be worthless.
But if the bonds have both your names on them he has to get your signature on the form for having the bonds replaced, so you have some negotiating room here.
Tom Adams
My husband and I are 40 year’s young and we have 3 small children age 5,8,10. We were thinking about purchasing 4 saving bonds one for us and one for each child. So, that we will have extra retirement savings and money for kids for college.
Do you think this is a wise to do?
Lisa - It’s impossible to answer your question without knowing more about your situation.
For most people without an employer-funded retirement account, however, Roth IRAs are a much better way to save for retirement than Savings Bonds, but it’s a bit more complicated to set this up. If you want the safety of Savings Bonds, set one up with a reputable company like Vanguard or TIAA-CREF and have your Roth money invested in a Treasury Inflation Protected Bond fund.
For your children, a Qualified Tuition Plan is better than Savings Bonds for most people, but it depends on your tax situation. You can find out more about these by doing a Google search on Qualified Tuition Plan and include the name of your state in the search, as different states have different plans.
Tom Adams
My Aunt want to give $2500.00 to her grandchildren and I sugjested savings bonds for the ones still in high school and want to know which ones would be the best for 3 years, so they will have money for college.
Looks like you overall recommend the I bonds over the EE? I am looking to purchase some as gifts and am not as familiar with the I as I am with the EE. They are for my children who are both under 4 - so there will be ample time for the bonds to mature.
Shelly and M - The interest rates paid by Savings Bonds are on the low end of stingy right now. I don’t really have any alternatives for you, but the I bond will do better than the EE bond, even just three years out, barring a complete financial disaster that leads to months of deflation.
Tom Adams
I have twin boys.. When they turned 5 I invested 10K into stocks, in 3 years it gained 2K, but lately with the economy in 6 months time, it has lost 6K. I also have $ in CD’s and college savings funds, however I am also looking into other things to build upon moneys. My boys are now 9. Can you suggest a place for me to invest money in that will acrue at a steady rate? I would like to give them the money upon graduation.
B. Lujan - if you’re interested in a steady rate, Series I bonds do that, as shown in the chart here.
Tom Adams
Is it possible to exchange Series EE Bonds for Series I without a penalty? And would that be beneficial, especially for more current EE bonds that have a lower interest rate?
Joan - no, exchanging Series EE and I bonds is not possible, although it would definitely be beneficial.
Tom Adams
I have a savings bond from 1992, with both me and my moms name on it to be cashed in athe the time of my fathers death but I think my mom has cashed them in without me, can she do that.
And how can I find out how many bonds in total had my name on them?
Miles - If the bonds have been cashed, you can’t find out anything unless you have the serial numbers of the bonds. If they have not been cashed, you can follow the process outlined here.
Either co-owner of a Savings Bond can cash it without the knowledge or permission of the other.
Tom Adams