New Savings bonds No interest ?

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blevine
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New Savings bonds No interest ?

Post by blevine » Wed Feb 01, 2012 10:26 pm

Bought savings bonds towards end of Jan, and TD says they have issue date 1/1/2012 as expected.

Now on Feb 1, I see older I and EE bonds have Jan interest posted, but not my 2 new I and EE bonds from January.

Any idea why ?

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Mel Lindauer
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Re: New Savings bonds No interest ?

Post by Mel Lindauer » Wed Feb 01, 2012 10:30 pm

blevine wrote:Bought savings bonds towards end of Jan, and TD says they have issue date 1/1/2012 as expected.

Now on Feb 1, I see older I and EE bonds have Jan interest posted, but not my 2 new I and EE bonds from January.

Any idea why ?
Since you're seeing redemption value, the Treasury withholds the last three months' interest prior to you owning the I Bonds for five years (that's to account for the early redemption penalty). After three months, you'll start to see interest show up for the first month, and that pattern will continue until you reach five years. At that time, you'll see all the withheld interest show up at once and you'll think you struck gold! :D
Best Regards - Mel | | Semper Fi

blevine
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Re: New Savings bonds No interest ?

Post by blevine » Wed Feb 01, 2012 10:45 pm

Thanks Mel. Thought that might be it. Been years since I bought one.
With the rate on the EE, I should to be patient for 20 years to bother checking anyway !

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Mel Lindauer
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Re: New Savings bonds No interest ?

Post by Mel Lindauer » Wed Feb 01, 2012 10:55 pm

blevine wrote:Thanks Mel. Thought that might be it. Been years since I bought one.
With the rate on the EE, I should to be patient for 20 years to bother checking anyway !
Yeah, at the present time, that EE 3.5% for 20 years doesn't look so shabby when compared to what else is available risk-free and tax deferred.
Best Regards - Mel | | Semper Fi

alanf56
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Re: New Savings bonds No interest ?

Post by alanf56 » Wed Feb 01, 2012 11:11 pm

I read on the TD site that the EE bond is guaranteed to double in 20 years. That is simple interest of 5%. That seems to be a no brainer for money you know you don't need for 20 years. Am I missing something here????

centrifuge41
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Re: New Savings bonds No interest ?

Post by centrifuge41 » Wed Feb 01, 2012 11:26 pm

Doubling in 20 years is only 3.52% interest compounded. Depending on your duration and how sure you are about cashing out early, you may want to think hard about this.

Buying EE bonds is similar to buying a 3.52% 20 year CD with a tremendously large early termination penalty. Whereas CDs from institutions such as Ally only charge a small (60 day interest) early termination penalty. Of course, the rate is much inferior as well (1.79% APY on a 5 year CD currently).

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