does anyone know much about savings bonds?

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Lynlw

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Justin and I were talking about him starting to buy savings bonds, small ones every month or so, I always wanted to do that because MY parents did, but you know the way it goes, let me get thru this/pay off that and then I will start getting them.... and over 20 years later ooops

So I looked online to see if you had to go to a bank to buy them and now am very confused. http://www.savingsbonds.gov/indiv/research/indepth/ebonds/res_e_bonds_eebuy.htm apparently there are 2 kinds now paper and Electric, and they work totaly different, the paper, as always, you pay 1/2 of the face value (like 25 for a 50)and in a certain time (20 years now?) you get that amount and then it starts collecting interest until it maxes out.
the Electric you pay what the face value is 50 for 50 and it works different, but I still haven't totally figured it out.

You also can trade your paper bonds you currently have into electric ones. SOOO does anyone know which is best if you plan on keeping them until you retire? (what brought this up with Mom dieing and all the banking ect, dad mentioned he cashes out a couple bonds a month that maxed out and it supplements his pensions ect nicely)

basically what we're trying to figure out which would be better to have financially, it would be easier to do everything online instead of going to the bank every month to buy one, but if financially it would make a difference, in 20-30 years, then we'd buy paper ones.
Also has anyone traded in their paper bonds for electric or thought about it and decided not to?
and last say you want to spend 50 a month, would it be better to have two 50 dollar paper bonds or one 100 dollar one?
 
I can only answer the last part. Better to buy 1 $100 then 2 $50. At least the way I figure the interest and payments on them. Maybe I'm wrong?
 
Lynn, US savings bonds are a very safe, conservative way to save money. I am not expert on these bonds, but I believe the bonds, paper or electronic, are pretty similar. The "paper" bonds are sold at a discount (you pay $25 for a $50 face value bond). The bond accrues interest internally and at a stipulated time will be worth the face value, $50. The electronic bond can be purchase in any amount over $25, ie $25.50, $55.37, $112.10, etc. Interest is added to the bonds value periodically. US savings bond interest is usually exempt from local or state income tax and the federal income tax is deferred until redemption. Either type of bond will continue to earn interest for as long as thirty years.

I suggest you and Justin visit your local bank. They can go over the pros and cons of each of these bond types. They will also get the bonds issued for you and can help set up an automatic purchase plan if you wish.

This is a very good program for Justin to start at his young age. The most powerful financial tool is TIME coupled with COMPOUND INTEREST.
 
Thanks and Ross that's what I thought (bigger IS better lol) but don't know why I thought that. After we talk to the bank I'll let you know if we're right
 

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