Savings Bonds

formerlyGDaisy09 · March 2014

I have a handfull of e-bonds that my grandfather gave me...they were intended to help pay for college, but hadn't matured even by the 4th year I was there. some of them have matured at this point, but still some of them have not. I don't know what I should do with them. I used some to make the downpayment on my first car out of college, and I remember that come tax time I had to pay taxes on them, but had I used them for education they would have been tax exempt.

H and I are considering adding solar panels to our home at some point...I wonder if there's a similar exemption for renewable energy investments?

Shold I invest them somewhere else? just let them sit in our safety deposit box maturing and building interest?

brij2006 · March 2014

Cash them out and pay off debt with them or put it into a Mutual Fund. It will grow a lot better there than the measly growth in the bond.

formerlyGDaisy09 · March 2014

Thanks, for the ones that haven't matured, should I wait until they do?

brij2006 · March 2014

No. Go ahead and cash those out too.

The thing is, they will gain more interest in a mutual fund than they will at the 1% interest from the government. So even if they haven't matured yet, the current cash value and interest you will make in a MF will quickly surpass anything you would've made by waiting for it to mature.

blondie42107 · March 2014

Any thoughts on when grandparents or other family members want to gift savings bonds to babies or children??

We actually refuse to provide family the information needed to purchase these because even though it's family we trust, we just don't want to ever have to wonder.

formerlyGDaisy09 · March 2014

I have no idea how my grandfather decided that these e-bonds were the way to go...at one point I remember my mom telling him that i-bonds or something else were better (granted this is almost 30 years ago he started doing this) the ones that had matured by the time I went to college bought my books for a few years.

We've talked about giving cash to SIL to put into a fund for our niece and nephew...but I'd only do that if you can be sure it'll go to the right place.

brij2006 · March 2014

@blondie42107 I would advise them to just give cash and you will put it in a mutual fund for their college education or whatever they choose to do with it (if they don't want to go to college).
It will have a lot more value that way than it will in a savings bond.

brij2006 · March 2014

Gdaisy09 said:

I have no idea how my grandfather decided that these e-bonds were the way to go...at one point I remember my mom telling him that i-bonds or something else were better (granted this is almost 30 years ago he started doing this) the ones that had matured by the time I went to college bought my books for a few years.

We've talked about giving cash to SIL to put into a fund for our niece and nephew...but I'd only do that if you can be sure it'll go to the right place.

My grandparents were the same way. That was the "thing" to get your grandkids.

We just cashed mine out in December, and not a single one of them was matured. It came out to $1,500 that we were able to pay off a student loan with. However, we only had to claim $800 in income on our taxes from it because they only require you to claim the interest.

They really are a bad investment now.

vlagrl29 · March 2014

is there anyway to roll it over into your retirement account? That way you avoid taxes?

blondie42107 · March 2014

vlagrl29 said:

is there anyway to roll it over into your retirement account? That way you avoid taxes?

If that's possible, I'd like to know!

brij2006 · March 2014

vlagrl29 said:

is there anyway to roll it over into your retirement account? That way you avoid taxes?

I don't believe so since it's a government investment.

formerlyGDaisy09 · March 2014

the only one I'm aware of is allowing the interest to be tax exempt is for tuition. but since there are so many incentives for "green energy" projects before 2016 I might do a little researce and see if it could go to that.

vlagrl29 · March 2014

If you can't avoid taxes, then I would suggest cashing out little bit at a time so you avoid less taxes on it every year since it will be considered income.

KatieCutie05 · March 2014

I had savings bonds too that i just cashed out about 6 months ago. The current rate of growth was like 2% - its was just plain rediculous. Mine weren't matured yet either -it takes way too long to "mature" and be worth the full amount (your grandfather paid half that so its worth atleast that much)

I had 700 left (fully matured it would have been 900) but it would have taken another 15 years to get there. So i cashed it out and put that 700 toward paying off my 18%interest CC so essentially i made 18% on that money instead of 2%.

Cash it out immediately. Use it to pay off debt if you have any - or put it in an IRA or growth stock mutual fund.

As far as taxes go the interest it earned since purchased counts as income on your taxes. So i got an extra 130 in taxable income on my taxes this year. Nothing that changed much of anything.

Yes if you use it for tuition then that money would be tax exxempt but tuition is the only way to make it tax exempt. The Solar panels are an additional tax deduction thats not related and you'll get regardless.

KatieCutie05 · March 2014

is there anyway to roll it over into your retirement account? That way you avoid taxes

No, but if you cash it out the interest will count as taxable income. Then you can ALSO purchase an IRA that same year and that will give you a tax deduction so it cancels each other out. You'll just be limited at 5,500 for an IRA that year if you are married filing jointly.

blondie42107 · March 2014

So far any money we've received from family that want us to buy bonds, we haven't done yet. Specifically since they are face value now.

ta78 · March 2014

You can get a deduction for your solar panels, but not exemption.

I started asking for just cash from family when they switched all bonds to online. I think DS was given only $40 before that.

formerlyGDaisy09 · March 2014

You are right, it's a deduction.

just checked values of my savings bonds...most of them haven't matured and are earning like 1.2% interest, however several of the older ones are earning 4% interest.

brij2006 · March 2014

I would still cash them out and invest them in a Mutual Fund. Those are averaging 8% right now, and are usually anywhere from 6-12%.

formerlyGDaisy09 · March 2014

fortunately or unfortunately, I think they're all going towards putting a new roof on our house near the end of the summer....can you get that money out of a mutual fund after 4-5 months? The roof needs to be done this year (some of the snow finally melted and the shingles are a bit wavey), we've been saving for the roof since we bought the house, but with H's recent unstable job situation we haven't been able to put away as much as we'd calculated we would be able to. I think with what we've got saved and these bonds we can pay 70% of the project in cash and finance the last 30%...if we have another winter like this one I have a feeling we'd be dealing with fixing a lot more than just putting standing seam over the shingles next year.

I could cash them in now and stick them in our savings account, but that earns less interest than the savings bonds. if money in a mutual fund isn't easily accessible in 4-5 months I think it makes the most sense to just hold onto them until we do the roof?

brij2006 · March 2014

Putting them toward the roof to finance less would be a smart option. Most mutual funds have to be open a year before there's no penalty for pulling from it. So you could just keep the savings bonds until closer to the day you need the roof done.

Savings Bonds

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