In praise of Series EE Savings Bonds!

Thursday, August 18th, 2011
Categorized as: Savings Bonds and competitive investmentsSeries EE US Savings Bonds

Long-time readers know that I have long declared a preference for Series I bonds over series EE bonds. And that continues.

However, it’s remarkable that new investments in Series EE bonds, which have a fixed-rate of 1.10% and a guarantee that they will double in value in 20 years (an annual rate of 3.5%) are now a better investment than the equivalent Treasury securities that the big boys buy.

Market rates on the 20-year Treasury dipped below 3.5% as the current stock market crash began at the beginning of August. This means that if you intend to stay invested for 20 years, the Series EE Savings Bond is a better deal than the 20-year Treasury security.

And if you only intend to keep your money invested for 5 years, the EE bond’s 1.10% rate has also been above what you could get from the 5-year Treasury security for the last seven trading days. For shorter terms, such as a one-year investment (the minimum for EE bonds), the difference is even greater.

The interest rates the U.S. government has to pay to borrow – even for very long terms – have been dropping like a rock ever since the S&P downgrade, exactly the opposite of what everyone expected to happen.

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FDIC Insured Certificates of Deposit can pay 1 or 2% more than savings bonds when held for a similar length of time. See top CD Rates Below:

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June 1, 2010

After six years, over 400 posts, 3,680 real comments, and over 90,000 spam comments (thank you, Akismet, for making managing a blog with comments possible), I am closing public comments on Savings-Bond-Advisor.com. I will contine to update the main articles on this site, but not the comments.

Virtually every question about Savings Bonds has been asked and answered on this site multiple times. Use the search feature (see the box in the gray area near the top of this page) or the detailed menu on the lower part of the home page to find the information you're looking for. If you have a copy of Savings Bond Advisor, you can ask me a question here.

Tom Adams

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