Paper bonds vs Treasury Direct

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Mister B
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Paper bonds vs Treasury Direct

Post by Mister B » Sat Mar 22, 2014 10:52 am

I have both. Is there really any advantage to converting the paper to electronic? All I see is loss of flexibility....

John3754
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Re: Paper bonds vs Treasury Direct

Post by John3754 » Sat Mar 22, 2014 11:10 am

Not having to keep track of the whereabouts of paper bonds for 30 years.

What flexibility do you feel you're losing?

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Mister B
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Re: Paper bonds vs Treasury Direct

Post by Mister B » Sat Mar 22, 2014 11:35 am

Going to bank safety deposit box and cashing them in on the spot.

John3754
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Re: Paper bonds vs Treasury Direct

Post by John3754 » Sat Mar 22, 2014 11:43 am

Mister B wrote:Going to bank safety deposit box and cashing them in on the spot.
Many banks won't cash paper bonds anymore, like mine for example.

dbr
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Re: Paper bonds vs Treasury Direct

Post by dbr » Sat Mar 22, 2014 12:34 pm

Maximum convenience would probably be a Treasury mutual fund if done at lowest cost.

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Chin00k
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Re: Paper bonds vs Treasury Direct

Post by Chin00k » Sat Mar 22, 2014 2:53 pm

John3754 wrote:
Mister B wrote:Going to bank safety deposit box and cashing them in on the spot.
Many banks won't cash paper bonds anymore, like mine for example.
Which bank is that?

G-Force
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Re: Paper bonds vs Treasury Direct

Post by G-Force » Sat Mar 22, 2014 3:07 pm

Mister B wrote:Going to bank safety deposit box and cashing them in on the spot.
With electronic bonds you can cash them in online and have the money electronically deposited to your bank account. This saves the hassle of going to the branch.

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pjstack
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Re: Paper bonds vs Treasury Direct

Post by pjstack » Sat Mar 22, 2014 3:25 pm

Chin00k wrote:
John3754 wrote:
Mister B wrote:Going to bank safety deposit box and cashing them in on the spot.
Many banks won't cash paper bonds anymore, like mine for example.
Which bank is that?
Banks are not required to give out more than $1,000 in cash, but if you have an account at that bank they will transfer larger amounts to your account.

I prefer paper bonds. They are in my safety deposit box. They even look like money and are unlikely to overlooked in the event of my demise. (Electronic accounts might be overlooked by heirs.)

Yes, I'm old fashioned, and do not have the touching faith in all things electronic. Come the next solar flare/coronal mass ejection similar to the one in 1859 (that fried telegraph lines!), paper backups to electronic media may prove valuable.

Anyway, I don't see any advantage to converting existing paper bonds to electronic.
As always, your mileage may vary.
pjstack

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tetractys
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Re: Paper bonds vs Treasury Direct

Post by tetractys » Sat Mar 22, 2014 3:32 pm

I agree that a paper backup for TD savings bonds is a good idea. I'm also concerned with possible solar, or other, episodes that might fry or magnetically alter anything involving fragile, transient electronic circuits. And I certainly do print out a TD statement when my holdings change. But, I can't say this gives any practical advantage to paper over electronic. -- Tet

epictetus
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Re: Paper bonds vs Treasury Direct

Post by epictetus » Sat Mar 22, 2014 5:47 pm

advantage to paper bonds: if they are lost/stolen they can be replaced
disadvantage to treasury direct: it is your loss/liability if they are stolen from your account.
Focus on what you can control

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Re: Paper bonds vs Treasury Direct

Post by placeholder » Sun Mar 23, 2014 12:19 pm

tetractys wrote:I'm also concerned with possible solar, or other, episodes that might fry or magnetically alter anything involving fragile, transient electronic circuits.
If that happened I doubt your paper bonds would be any good either as the entire banking and financial system would be is massive disarray.

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nisiprius
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Re: Paper bonds vs Treasury Direct

Post by nisiprius » Sun Mar 23, 2014 1:58 pm

Factors favoring paper I bonds, and the reason why I am not electronifying mine:

1) You cannot have the exact equivalent of co-owned bonds in electronic form. Co-owned paper bonds can be redeemed by either owner, without the other's permission. In the case of "honey, if I'm hit by a bus there are I bonds in the safe deposit box" I think true co-owership reduces the chance of honey encountering bureaucratic problems redeeming them. (You can give honey transaction authority on your bonds, but you need to remember to do it bond by bond; there is something that puts two names on electronic bonds but it is NOT actual co-ownership. Maybe Mel knows the details?)

2) For good or bad, you are missing out on "modality diversification." The situations in which one might have difficulties accessing and liquidating electronic I bonds are very different from those involving paper I bonds.

3) This advantage may be rapidly fading or already gone as fewer and fewer banks are willing to redeem I bonds directly, but if your bank is willing redeem them, I think the time lapse between ordering redemption and having literal spendable "funds available" in your bank is shorter with paper I bonds. Of course that ignores the time it takes to get to the bank and redeem them in the first place.

4) I believe the chances of your heirs overlooking and perhaps losing paper I bonds is smaller than the chances of their overlooking an electronic account. Young people disagree, but I'm not sure the people who disagree have actually had to look for a deceased relative's assets.

5) The Treasury Direct website has its share of troublesome glitches. It does seem to have problems remembering that my computer is authorized, no matter what I do, and constantly insists on my using a fresh "one-time" password. Once I actually lost access, got locked out; when I called they were quickly able to fix it and get me in. I don't want to be overly critical about the website. I've had much worse problems with MyDisneyExperience! But it's something to consider.

Factors favoring electronic I bonds:

1) It's pretty obvious that they just don't want to support paper bonds, and it is hard to predict at what point using paper bonds will become untenable.

2) Although I honestly believe that it will turn out that there is a problem with heirs failing to claim electronic I bonds, and a minor boom for state treasurers as boomers die and their assets are unclaimed and abandoned, there is hard data that a lot of paper I bonds go unclaimed, too, and possibly i am wrong.
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Re: Paper bonds vs Treasury Direct

Post by sscritic » Sun Mar 23, 2014 2:54 pm

nisiprius wrote: (You can give honey transaction authority on your bonds, but you need to remember to do it bond by bond; there is something that puts two names on electronic bonds but it is NOT actual co-ownership. Maybe Mel knows the details?)
TD knows. The word is with.
The registration for "Two owners" is set up differently for electronic and paper bonds:
  • Electronic bonds – primary owner with secondary owner. Only the first named owner may make transactions (such as redeeming the bond). The first named owner may give the second owner the right to view a bond or rights to view and conduct transactions in a bond.

    The registration reads: First Owner WITH Second Owner. For example, Mary Smith SSN 987-654-321 WITH John Smith SSN 123-456-789.

    Paper bonds – co-owners. Either owner may redeem the bond without the knowledge or approval of the other co-owner. The registration uses OR between the two co-owners' names.
The reason for bond by bond is that you can own one bond with your wife, another bond with your son, another bond with your daughter, and another bond with your honey. Paper bonds are no different. If you want a co-owner, you have to name one for each bond each time you buy, as in bond by bond.

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Phineas J. Whoopee
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Re: Paper bonds vs Treasury Direct

Post by Phineas J. Whoopee » Sun Mar 23, 2014 3:14 pm

Although I too have some affection for paper savings bonds, it's never been clear to me why it would take longer to include in one's list of accounts, which should be one chapter in "the document to be accessed upon my death or disability":
Treasury Direct
Account number: blah blah blah
Holds U.S. Savings Bonds; Treasury Inflation Protected Securities (TIPS); and Treasury Bills (T-bills) with standing orders to roll them.
than it would to compose and post a message at bogleheads.org explaining how much harder it will be for heirs to detect electronic than paper bonds if left to their own devices.

PJW

sscritic
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Re: Paper bonds vs Treasury Direct

Post by sscritic » Sun Mar 23, 2014 3:24 pm

I always kept my paper bonds* in my safety deposit box that my wife didn't have access to. There are also strict rules about opening a safety deposit box after death. This is for one state. Your state might be different.
Without a court order either the spouse, a parent, a descendent (at least 18 years old), or a person named as executor of the deceased box holder’s estate in a document that appears to be a copy of the Will can have access to the box to examine the contents. This must be done with an officer of the bank acting as a witness. The bank may provide the original Will of the box holder to the named executor, burial plot information to the person examining the contents, and insurance policies to the named beneficiary.

The bank may release original document(s) mentioned previously to the designated individuals examining the contents of the box provided the bank keeps a copy of any Will and obtains a signed receipt for the Will and any other document(s) indicating who they were released and delivered to. Copies of the Will must be kept for four years after the date of delivery.
...
No other contents of the safe deposit box can be removed except those contents specifically outlined in 36C and 36D.

NOTE: If a box is jointly leased, the death of a lessee does not affect the right to access the box or to remove the contents thereof for the surviving lessee unless there is a contract clause to the contrary.
If it is your box and not a joint box, then the spouse can't remove anything but will, burial plot, and insurance policies. No savings bonds allowed.

* Lie of course. I didn't have paper bonds. The safety deposit box was where I kept the family jewels.

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Phineas J. Whoopee
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Re: Paper bonds vs Treasury Direct

Post by Phineas J. Whoopee » Sun Mar 23, 2014 3:31 pm

sscritic wrote:I always kept my paper bonds* in my safety deposit box that my wife didn't have access to. There are also strict rules about opening a safety deposit box after death. This is for one state. Your state might be different.
...
If it is your box and not a joint box, then the spouse can't remove anything but will, burial plot, and insurance policies. No savings bonds allowed.
...
In my state only the executor will be allowed to open a safe deposit box they didn't already have access to. Therefore, for here, it's a terrible idea to store one's will there (it's OK to keep a copy, but the original should be lodged someplace else).

PJW

John3754
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Re: Paper bonds vs Treasury Direct

Post by John3754 » Sun Mar 23, 2014 5:36 pm

I don't understand this sentiment of "I want paper bonds because I don't trust electronic media" or "I'm afraid my heirs will overlook electronic assets"...are all your other assets not electronic? Your stocks funds? Your bond funds? Your CDs? Your savings/checking accounts? How is this any different than any of these assets? When you buy a stock fund do you request paper stock certificates that you keep in a safe deposit box? I guess I just don't get it.

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pjstack
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Re: Paper bonds vs Treasury Direct

Post by pjstack » Sun Mar 23, 2014 10:00 pm

John3754 wrote:I don't understand this sentiment of "I want paper bonds because I don't trust electronic media" or "I'm afraid my heirs will overlook electronic assets"...are all your other assets not electronic? Your stocks funds? Your bond funds? Your CDs? Your savings/checking accounts? How is this any different than any of these assets? When you buy a stock fund do you request paper stock certificates that you keep in a safe deposit box? I guess I just don't get it.
I understand your point, and can't argue with it, BUT, my checking account won't be overlooked because my checkbook is laying on my desk, my Vanguard account won't be overlooked because of paperwork in my file cabinet (and, It's a joint account.)

I just like the idea that my spouse can take the paper bonds to the cashier and get money rather quickly (and so can I, for that matter)

OK, maybe I'm like Scrooge McDuck and just like to riffle through them from time to time! (Not as bruising as diving into a pile of gold coins!)

Your mileage may vary.
pjstack

sscritic
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Re: Paper bonds vs Treasury Direct

Post by sscritic » Sun Mar 23, 2014 10:43 pm

pjstack wrote: I understand your point, and can't argue with it, BUT, my checking account won't be overlooked because my checkbook is laying on my desk, my Vanguard account won't be overlooked because of paperwork in my file cabinet (and, It's a joint account.)
Of course you do what you like, but if paper is what your heirs need, you can make a file called Savings Bonds and put some pieces of paper in it that list your bonds at TD and then put that file in your filing cabinet with your Vanguard file. If you worry that Savings Bonds is too far from Vanguard in an alphabetical sorting of your files, you could call it Treasury Direct, since T is closer to V than S is.

I do understand your point about playing with your money, and it is indeed easier to play with your actual bonds than those pieces of paper I just suggested you create. Maybe if you got some card stock and printed up fake bonds with the actual serial numbers from your TD account (if you were ever to have one), you could play with them. Also, you wouldn't be stuck with the pictures that the Treasury Department uses. In fact, you could put a picture of Scrooge McDuck on some of your bonds! Plus, you could put them in the file for your heirs to find. There is your solution! (And a great one it is, if I do say so myself.)

Caveat. Your heirs might think your Scrooge McDuck bonds are fake and not realize they are representations of the real bonds you have at TD. Hmm. I have to think some more.

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Re: Paper bonds vs Treasury Direct

Post by Jack FFR1846 » Mon Mar 24, 2014 7:32 am

How is it to use treasury direct online?

I used to buy a ton of savings bonds when paper was available. My dad passed away and left a couple of $200 bonds in treasury direct for each of my kids. My mom sent them the proper paperwork. Between my mom and myself, we spent literally hours on the phone with treasury direct in order to process the cashing of these bonds. If they were paper, my mom would have taken the paper with my kids name out of her safe deposit box and handed them to me.

Has the site improved dramatically? Anyone have an estimate of time to buy a bond? Time to cash a bond?
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Re: Paper bonds vs Treasury Direct

Post by Grt2bOutdoors » Mon Mar 24, 2014 7:44 am

Jack FFR1846 wrote:How is it to use treasury direct online?

I used to buy a ton of savings bonds when paper was available. My dad passed away and left a couple of $200 bonds in treasury direct for each of my kids. My mom sent them the proper paperwork. Between my mom and myself, we spent literally hours on the phone with treasury direct in order to process the cashing of these bonds. If they were paper, my mom would have taken the paper with my kids name out of her safe deposit box and handed them to me.

Has the site improved dramatically? Anyone have an estimate of time to buy a bond? Time to cash a bond?
Putting in an order to purchase can take all of about a minute or less, once your account is set up with the bank information and confirmed by TD Direct. I have never liquidated yet, so I can't attest to it, but some on the board have said you can have your money within 1-3 business days.
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2cents2
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Re: Paper bonds vs Treasury Direct

Post by 2cents2 » Mon Mar 24, 2014 8:04 am

Jack FFR1846 wrote: Has the site improved dramatically?
Nope--not in my opinion. I still have trouble logging in. I still have trouble navigating the site. I still have trouble with getting bumped off.

Time to cash a bond?
I recently cashed in some bonds--it took 2 business days.

The other thing I find annoying is they don't automatically send you a 1099-INT at tax time. You have to log in to get it. And, the product that gets printed is a multi-page document.

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Re: Paper bonds vs Treasury Direct

Post by 2cents2 » Mon Mar 24, 2014 8:17 am

Grt2bOutdoors wrote: I have never liquidated yet, so I can't attest to it, but some on the board have said you can have your money within 1-3 business days.
This reminds me of another pitfall. You have to be sure to keep your bank info up to date. If you close out the bank that your TD is linked to, it will take some paperwork/time to get the account info changed on TD.

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Re: Paper bonds vs Treasury Direct

Post by Jack FFR1846 » Mon Mar 24, 2014 8:30 am

Still sounds like a mess.

Last time I cashed bonds (to pay for 2 cars), I walked in with bonds to my credit union. The money was in my account and immediatly available. This was significantly more than $1k. This was last fall.
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Re: Paper bonds vs Treasury Direct

Post by Jeff7 » Mon Mar 24, 2014 9:32 am

pjstack wrote:Banks are not required to give out more than $1,000 in cash, but if you have an account at that bank they will transfer larger amounts to your account.

I prefer paper bonds. They are in my safety deposit box. They even look like money and are unlikely to overlooked in the event of my demise. (Electronic accounts might be overlooked by heirs.)

Yes, I'm old fashioned, and do not have the touching faith in all things electronic. Come the next solar flare/coronal mass ejection similar to the one in 1859 (that fried telegraph lines!), paper backups to electronic media may prove valuable.

Anyway, I don't see any advantage to converting existing paper bonds to electronic.
As always, your mileage may vary.
Assuming society survives the next Carrington Event, bonds might not be of much concern, paper or otherwise. ;)
So much of the financial system, and darn near everything else, is electronic now anyway.

(Unless we do a proper job of detecting the CME and then shut down or disconnect everything that needs it, weather the storm, and hope it doesn't take too many years to fully recover.)

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