Late 80s EE savings bonds

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Shireman28
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Late 80s EE savings bonds

Post by Shireman28 » Mon Jul 02, 2012 6:25 am

I have 4 old $50 EE savings bonds from 87-90, birthday presents from my late Grandpa.

I looked them up on the net, they're worth about $75 each.

But Interestingly to me, it appeared they were earning 4% each according to the website.

How does the interest work, and should I just keep them compared to the CD rate I could get for now?

Thanks.

Grt2bOutdoors
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Re: Late 80s EE savings bonds

Post by Grt2bOutdoors » Mon Jul 02, 2012 7:37 am

Shireman28 wrote:I have 4 old $50 EE savings bonds from 87-90, birthday presents from my late Grandpa.

I looked them up on the net, they're worth about $75 each.

But Interestingly to me, it appeared they were earning 4% each according to the website.

How does the interest work, and should I just keep them compared to the CD rate I could get for now?

Thanks.
Keep them (and thank your grandpa :wink: ) - the final maturity date is 30 years from the month of purchase. The interest rate is 4% (compounded semi-annually, I believe). The interest accrues until the bond is cashed in, you will not get a 4% rate with a AAA rating, anywhere today or tomorrow. If you are not in need of the money, I would hold until final maturity and then redeem them.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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SSSS
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Re: Late 80s EE savings bonds

Post by SSSS » Mon Jul 02, 2012 7:41 am

The rules are complex and have changed every few years, so instead of trying to decipher things yourself, you'd be better off using one of the tools:

Savings Bond Calculator -- http://www.treasurydirect.gov/indiv/too ... ndcalc.htm
Savings Bond Wizard -- http://www.treasurydirect.gov/indiv/too ... wizard.htm

Using the Wizard, you can save your inventory & easily check values & current rates in the future.

You could also convert them to electronic format so you can monitor them on Treasury Direct.

Yes, you should probably keep them until final maturity (30 years from issue date) if possible. Keep in mind that if you redeem them (or they reach final maturity), you'll owe taxes on all interest ever accrued on the bond, so you probably want to put that off as long as possible. Or if you're going to have a year in a low tax bracket, it might make sense to redeem them then in order to minimize the taxes.

JRA
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Re: Late 80s EE savings bonds

Post by JRA » Mon Jul 02, 2012 8:47 am

I have a ton of EE's from the 80's. They weren't such a great investment in 1984, but I'm glad I hung onto them. Most of them are yielding well over 5% and are worth over $200 per $50 bond. Unfortunately, I will have to redeem them in a couple of years. My advice: hang onto them as long as you can; you get tax deferred returns and high interest rates compared to today. I also second the recommendation of using the savings bond wizard to calculate their value.

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Mel Lindauer
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Re: Late 80s EE savings bonds

Post by Mel Lindauer » Mon Jul 02, 2012 10:22 am

GRT2BOUTDOORS wrote:
Shireman28 wrote:I have 4 old $50 EE savings bonds from 87-90, birthday presents from my late Grandpa.

I looked them up on the net, they're worth about $75 each.

But Interestingly to me, it appeared they were earning 4% each according to the website.

How does the interest work, and should I just keep them compared to the CD rate I could get for now?

Thanks.
Keep them (and thank your grandpa :wink: ) - the final maturity date is 30 years from the month of purchase. The interest rate is 4% (compounded semi-annually, I believe). The interest accrues until the bond is cashed in, you will not get a 4% rate with a AAA rating, anywhere today or tomorrow. If you are not in need of the money, I would hold until final maturity and then redeem them.
Yes, they're guaranteed to yield at least 4% until maturity. As has been mentioned, the interest is credited and compounded every six months, based on the issue date, so if you're going to redeem them prior to maturity, be sure to do so right AFTER the six month's interest has been credited. Redeeming them just one day earlier early can cost an investor six months' worth of interest. And holding on to them for anything other than another six months won't earn you any additional interest at all.
Best Regards - Mel | | Semper Fi

Shireman28
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Re: Late 80s EE savings bonds

Post by Shireman28 » Mon Jul 02, 2012 10:34 am

Thanks everyone for the help!

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