I have about 35 Series EE savings bonds from 1986-1996, now these continue to gain interest till 30 years after the issue date, what im wondering if would i be better off cashing these and puttin them into a cd or let them all reach their 30 year maturity??
http://www.treasurydirect.gov/indiv/research/securities/res_securities_stoppedearninginterest.htm
CD’s are state and local taxed. If you want the tax-leveraged angle, try starting a Roth IRA with the proceeds or invest in local muni’s.
yeah if i cashed in the bonds i would put the money into a roth but since i still can gain more interest from these bonds im not sure if im making more interest in keeping the bonds or cashin them all and puttin them into an ira, i found out that im gettin around 4% on most of these bonds but i dont know since maybe i have 35 separate bonds that im making more than just having one ira
is there a pentalty or fee to cash out the savings bonds?
Yeah, if they are not held long enough you can get whacked for the previous three months’ interest. I think that is for holding less than 5 years tho, so he’s OK more than likely.
If you want “fire and forget” for the most part, then gov’t bonds are a great investment tool.
But, at 4% + you’re paying some taxes on the proceeds…it’s not going to be any better than, say, a “single A” rated muni bond which, when selected properly, would be triple tax free and slightly higher yielding overall. But don’t do muni’s in a Roth account, do that in a regular non-tax-advantaged account.
Or you could start a Roth IRA and buy high-quality mutual funds like IWN, RWR, PHO, VO, etc. or individual stocks that have fairly high yields: BAC WFC, DB are extremely good decent dividend yielding bank stocks.
Also, junk bonds funds can have spectacular results as well. Just don’t screw around with junk bonds individually… try something like VWEHX from Vangaurd if you want high-yield bonds but don’t want to absorb a lot of risk.
https://flagship.vanguard.com/VGApp/hnw/FundsSnapshot?FundId=0029&FundIntExt=INT
Also, diversify!!!
F.D.: I currently hold BAC and nothing else mentioned here.
i started a roth ira with 1000 bucks at pncbank and they gave me like a 5% rate but that what is it i like didnt buy stocks or anything, can you explain exactly what a roth is and wheres a good place to go to start one where someone can help me
Self-directed Roth IRA should be available at most on-line brokers, like Ameritrade, Scottrade, E*Trade, etc.
Also, a great link that explains it…
im so worried about losing money, what are low risk things i can invest in? im lookin at opening a roth ira on ameritrade?
http://en.wikipedia.org/wiki/Roth_IRA
Basically, you are just investing in the same stocks and mutual funds that you could trade daily. But, you are telling the government that this is a long-term investment. So they give you a tax break as an incentive.
You invest post-tax dollars and (unless the rules change) you are not taxed at retirement time when you draw from the account.
This is different from a 401K, where you invest pre-tax dollars and you are taxed when you draw.
You will lose money sometimes in the short-term, but that’s ok. You’ll make money in the long run. Another way to minimize risk is called Dollar Cost Averaging. Just contribute some money to your account periodically - like once a month - instead of a large sum all at once.
When the market is down, you are buying more shares. When the market is up, your account is worth more. It’s a win-win.
Very cool, welcome to freedom and financial independence in your retirement.
Remember that you’re funding retirement like jay said…
One fairly common strategy is to diversify by buying 5-10 high quality dividend paying stocks and medium term/medium interest bearing/investment grade bonds, and let the dividends and income work their magic. Enroll all the stuff in dividend re-investment and forget you have it.
Stay the course (cliche, I know) by putting cash into the Roth IRA at regular intervals and make sure you have the cash working (like they pay you for having just cash in it, money market type thing). When you amass some chunk of change to buy 25 or 50 or 100 shares of one of your investments, buy another set of units of one of the things that is currently “beaten down” a little in price.
Dividends and corporate quality is the key. Stuff like Bank of America, Coca Cola, Pepsi, Proctor and Gamble, Johnson and Johnson, etc.
thanks for the help, im on a ameritrade reading up and learning a little finally
How do you know all that?
Because one day I plan to retire very comfortably if I can. The only way you can do that is to take charge of your future and not just blindly listen to “investment advisors”. They are planning their retirement mostly…not yours! 
Right on…
paying someone to manage your money…that just doesn’t sound right.
Don’t get me wrong, some of them are good. But there are too many sheisters to warrant using any of them unless you have hard proof they are good and looking out for you.
I have seen this business for years, this guy is spot on with everything he said. The only thing I think he missed was if you have a 401K that is being matched the I would max out the matched % before investing in a Roth. but other than a 529 for school it is hard for a younger person to beat a roth.
The 401k is good, particularly with matching. But the Roth is really very important for young people. I would say do whatever you can to max the Roth, and the 401k matching. Don’t be bashful about exceeding the 401k matching, and doing other investing on the side.
If you are young, and you know anything about how screwed up the SS system is, you should understand that by not maxing your Roth, you are doing yourself a disservice.
The reason I didn’t bother to mention the 401 matching is because a lot of companies do not have a very good 401K match for their employees.
As for matching, yeah, if you have a 401K that matches, max the 401 employer match then self-directed Roth for the rest of your savings.
In the case where you have the 401K + match, I’d recommend like bics said and split the savings amount (like 50%-50%) to hedge against the Roth being taxed later by our gov’t. It’s unlikely, but it could happen. At least the 401 are pre-tax & highly compounded dollars.