You may be pleasantly (or unpleasantly) surprised at the value of the bonds you have sitting around. The Treasury has a savings bond wizard that will calculate the value of your old paper bonds.
It just depends on when they were purchased. What about the bonds his grandparents had purchased over the past several decades? Well many of those bonds may in fact be earning interest rates of 5% to 8%. I joke, but, I think it’s very important to recognize the world has changed, and savings bonds don’t deliver the same solutions that many people remember from years past.īut back to the boy who stood up in class to talk about the savings bonds. If Grandma wants to buy a EE savings bond for a grandchild to cash in to cover some college costs, she ought to buy that bond at the same time she's pressuring her kids to start working on grandchildren. At that point, you've effectively gotten an annualized return of 3.5% on your initial investment.
Savings bond wizard should i remove it full#
You need to wait the full 20 years to get the face value. So if you happen to cash out your EE bond in it’s 19 th year, 350 th day, you’ll only get the interest earned on the initial investment. Ouch!!įortunately, the Treasury has made a promise to double your investment in a EE savings bond in no less than 20 years. If you simply divide an interest rate by 72 you can determine the number of years it will take for something to double in value. Years ago, you could calculate when your bond would reach face value by using a simple mathematical formula called the Rule of 72.
This rate is detemined by discounting it against the 10 year Treasury Note rate, currently about 2.2%. The interest rate at the time of purchase dictates when a bond will reach its face value. The bonds, which are now issued in electronic form, are sold at half the face value for instance, you pay $50 for a $100 bond. You can buy EE savings bonds through banks and other financial institutions, or through the US Treasury's TreasuryDirect website. It’s not surprising that these interest rates are so low what is surprising is that people are still buying these securities based on very old information. EE bonds sold from to Octowill earn an interest rate of 0.50%, according to the US Treasury website. Savings bonds that double in value every seven or eight years, however, have gone the way of encyclopedia salesmen, eight-track tapes, and rotary telephones. They told him that in eight years it would be worth $100 and then it would continue to double in value every eight years thereafter. On special occasions, he said, his grandparents would give him a $50 EE savings bond. One student said he had savings bonds that were worth over $2,000. But the students were surprisingly interested in learning about EE savings bonds - those gifts that grandparents and other relatives give children to commemorate life events such as a birthday, first communion, or a Bar Mitzvah. I had hopes of starting a conversation about saving for large purchases such a college education or a car. Last month I made a presentation to a bunch of high school students on the importance of basic financial planning skills.
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