Am I too old to buy EE bonds?

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Topic Author
Quaestner
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Am I too old to buy EE bonds?

Post by Quaestner » Mon Mar 16, 2020 4:07 pm

I bought some series EE savings bonds from Treasury Direct as a safe part of our bond allocation. They are included in the same trust that holds our other investments. I started in 2012, and quit after 2016. I stopped buying because I was reaching my mid-50’s and thinking I didn’t want to be fooling with Treasury Direct while dealing with (possible) cognitive decline in my mid-70s and beyond. Plus, when I die, I don’t think DW wants deal with redeeming them on an annual basis - but she could. (We still buy I-bonds, but they don’t seem to have quite the same redemption issues as EE’s do.)

Now, I’m 57, in good health, and wondering if I should start buying again just for “a few more years”.

Can you all help me think about this?

How old is “too old” to be buying EE bonds?

Any personal experiences?

Is it easy to transfer/gift them to our children if at some point we decide we don’t want/need them?

Can heirs inherit this without cashing them in? (I wouldn’t want them to miss the 20-year double.)

Assuming heirs understand about the doubling period, would they be good/bad to receive as part of an inheritance? (I know that there’s no step-up on death.)

Should I just say “no” to buying these (with their tempting 3.5% 20-year yield) at this time?

Any thoughts are appreciated.

Gill
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Re: Am I too old to buy EE bonds?

Post by Gill » Mon Mar 16, 2020 4:39 pm

I don't think you're ever too old to buy EE or I-Bonds. With Treasury Direct it is easy to transfer them as gifts or as an inheritance. Yes, they can be inherited without redeeming the bonds. I'm a fair amount older than you and I continue to buy my limit of I-Bonds. I only have the one child and the bonds are all registered POD to her. There is no need to register them that way but I did it because Vanguard Trust Company would not accept them as part of my trust assets. I've also left instructions about the nature of the bonds and how to access Treasury Direct.
Gill
Cost basis is redundant. One has a basis in an investment | One advises and gives advice | One should follow the principle of investing one's principal

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sergeant
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Re: Am I too old to buy EE bonds?

Post by sergeant » Mon Mar 16, 2020 6:13 pm

I have a bunch hitting the 20 year mark over the next few years. I redeem a few thousand dollars worth every month. I'm not a buyer for the reasons you listed. DW has absolutely no investing acumen and the stress she would have dealing with them isn't worth the potential benefit. I'm the same age as you. :sharebeer
AA- 20+ Years of Expenses Fixed Income/The remainder in Equities.

donall
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Re: Am I too old to buy EE bonds?

Post by donall » Mon Mar 16, 2020 7:45 pm

Just a question on gifting bonds. If the bond is worth more than the $10,000 as it has been held a number of years, can the total bond be gifted or can you only gift up to the $10,000 yearly limit?

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Phineas J. Whoopee
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Re: Am I too old to buy EE bonds?

Post by Phineas J. Whoopee » Mon Mar 16, 2020 10:41 pm

If you can hold them, the ones issued today, for twenty years you get the benefit of doubling, which works out to an annualized return of 3.53%. Almost all of it comes right at twenty years. Sell even one month before then and you get very little.

I looked it up just now, and marketable Treasuries with twenty years left to run, as of close of trade today, yield 1.10%.

It's possible to set either a co-owner or a beneficiary on a savings bond. If you don't survive, and you leave enough instructions, the person who gets them after you can hold them until the doubling period is over.

I make no predictions, but merely point out the Treasury can make changes to Series EE Savings Bond terms and conditions on 1 May of this year, for bonds they sell that month or later. I'm not nervous, but it is possible.

I don't know if that means any individual is too old or not.

PJW

Enzo IX
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Re: Am I too old to buy EE bonds?

Post by Enzo IX » Mon Mar 16, 2020 10:58 pm

sergeant wrote:
Mon Mar 16, 2020 6:13 pm
I have a bunch hitting the 20 year mark over the next few years. I redeem a few thousand dollars worth every month. I'm not a buyer for the reasons you listed. DW has absolutely no investing acumen and the stress she would have dealing with them isn't worth the potential benefit. I'm the same age as you. :sharebeer
Same, I can't wait for these EE's to double, 20 years is a long time to wait, not worth the time with todays rates. I can't remember but I think mine are like 90% of the 5 year treasury note or something like that. Dog with fleas.

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Phineas J. Whoopee
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Re: Am I too old to buy EE bonds?

Post by Phineas J. Whoopee » Tue Mar 17, 2020 12:49 am

Enzo IX wrote:
Mon Mar 16, 2020 10:58 pm
sergeant wrote:
Mon Mar 16, 2020 6:13 pm
I have a bunch hitting the 20 year mark over the next few years. I redeem a few thousand dollars worth every month. I'm not a buyer for the reasons you listed. DW has absolutely no investing acumen and the stress she would have dealing with them isn't worth the potential benefit. I'm the same age as you. :sharebeer
Same, I can't wait for these EE's to double, 20 years is a long time to wait, not worth the time with todays rates. I can't remember but I think mine are like 90% of the 5 year treasury note or something like that. Dog with fleas.
Those older ones are even better.

PJW

Enzo IX
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Re: Am I too old to buy EE bonds?

Post by Enzo IX » Tue Mar 17, 2020 1:11 am

Phineas J. Whoopee wrote:
Tue Mar 17, 2020 12:49 am
Enzo IX wrote:
Mon Mar 16, 2020 10:58 pm
sergeant wrote:
Mon Mar 16, 2020 6:13 pm
I have a bunch hitting the 20 year mark over the next few years. I redeem a few thousand dollars worth every month. I'm not a buyer for the reasons you listed. DW has absolutely no investing acumen and the stress she would have dealing with them isn't worth the potential benefit. I'm the same age as you. :sharebeer
Same, I can't wait for these EE's to double, 20 years is a long time to wait, not worth the time with todays rates. I can't remember but I think mine are like 90% of the 5 year treasury note or something like that. Dog with fleas.
Those older ones are even better.

PJW
I think I bought at that time the annual limit of $30k, I guess shortly they will be worth $60k. :happy

I was also buying the I bonds with a real rate of 3%, 2.1%?, and I think 1.2%. Bob Brinker was pounding the table hard as well as Mel.

anoop
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Re: Am I too old to buy EE bonds?

Post by anoop » Tue Mar 17, 2020 1:14 am

I personally don't think these bonds are worth it. The money is very inaccessible and the annual limits and dealing with TD make them a pain to own and pass on.

However...

If your portfolio is big enough, this not going to make a big enough dent, so why bother?

If your portfolio is small, there is some possibility you might need the money for emergencies and this would be a bad deal for that, so why bother?

But the biggest unknown...

With ZIRP/NIRP it might make sense to hide money for smaller portfolios (with a large portfolio what you do with EE bonds won't make a dent). Even if you withdraw early you are doing no worse, maybe better, than regular T-bills and possibly T-bonds (which could have negative nominal yield). There's been some speculation they might change the doubling period to 30 years at some point, so it's also possible you go through the hassle for only a year or two before they end up being less of a good deal.

smectym
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Re: Am I too old to buy EE bonds?

Post by smectym » Tue Mar 17, 2020 1:37 am

Quaestner wrote:
Mon Mar 16, 2020 4:07 pm
I bought some series EE savings bonds from Treasury Direct as a safe part of our bond allocation. They are included in the same trust that holds our other investments. I started in 2012, and quit after 2016. I stopped buying because I was reaching my mid-50’s and thinking I didn’t want to be fooling with Treasury Direct while dealing with (possible) cognitive decline in my mid-70s and beyond. Plus, when I die, I don’t think DW wants deal with redeeming them on an annual basis - but she could. (We still buy I-bonds, but they don’t seem to have quite the same redemption issues as EE’s do.)

Now, I’m 57, in good health, and wondering if I should start buying again just for “a few more years”.

Can you all help me think about this?

How old is “too old” to be buying EE bonds?

Any personal experiences?

Is it easy to transfer/gift them to our children if at some point we decide we don’t want/need them?

Can heirs inherit this without cashing them in? (I wouldn’t want them to miss the 20-year double.)

Assuming heirs understand about the doubling period, would they be good/bad to receive as part of an inheritance? (I know that there’s no step-up on death.)

Should I just say “no” to buying these (with their tempting 3.5% 20-year yield) at this time?

Any thoughts are appreciated.
Well, I bought a ton of those in my very early 50s and a lot of them have doubled by now, and even though most say they should be cashed when doubled, the bonds are still earning better rates than I could get in a money market fund; so—I’m holding onto most of them

Topic Author
Quaestner
Posts: 238
Joined: Tue Jul 18, 2017 6:39 pm

Re: Am I too old to buy EE bonds?

Post by Quaestner » Tue Mar 17, 2020 1:11 pm

donall wrote:
Mon Mar 16, 2020 7:45 pm
Just a question on gifting bonds. If the bond is worth more than the $10,000 as it has been held a number of years, can the total bond be gifted or can you only gift up to the $10,000 yearly limit?

If I'm not mistaken, the yearly limit for 2020 is $15,000. There's no way a single $10,000 EE bond will hit that unless it reaches 20 years.

Topic Author
Quaestner
Posts: 238
Joined: Tue Jul 18, 2017 6:39 pm

Re: Am I too old to buy EE bonds?

Post by Quaestner » Tue Mar 17, 2020 7:34 pm

Gill wrote:
Mon Mar 16, 2020 4:39 pm
I don't think you're ever too old to buy EE or I-Bonds. With Treasury Direct it is easy to transfer them as gifts or as an inheritance. Yes, they can be inherited without redeeming the bonds. I'm a fair amount older than you and I continue to buy my limit of I-Bonds. I only have the one child and the bonds are all registered POD to her. There is no need to register them that way but I did it because Vanguard Trust Company would not accept them as part of my trust assets. I've also left instructions about the nature of the bonds and how to access Treasury Direct.
Gill
Thanks Gill for your perspective. I'm leaning towards buying more - I think DW is on board with this.

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