Terry Savage
Don't buy U.S. savings bonds.
How's that for a patriotic column this holiday weekend? For years, I took advantage of the July 4th holiday to promote the benefits of U.S. savings bonds, reminding readers that even people with small amounts of money could easily and automatically start a regular savings program -- and get current market rates of return. In other words, savings bonds were a good deal. No longer. In recent years, the government has made changes to the savings bond program that make bonds look like a "sucker" investment -- especially Series EE bonds that now carry low, fixed rates of return that won't keep up with inflation. Current Savings Bond Rates The traditional Series EE Bonds now pay a fixed rate for the life of the bond -- instead of adjusting every six months to keep up with rising interest rates to offset inflation. That fixed rate is based on the general level of Treasury note yields, and a new fixed rate is set every May and November. Currently, the fixed rate for Series EE bonds is 1.4%. If you purchase them before Nov. 1, you'll carry that rate for the first 20 years, which is the original maturity of the bond. But if you actually hold the EE bond for 20 years, it is guaranteed to reach its "face value," or double the original purchase price. That means your effective yield will be 3.6%. That applies only if you hold the EE bonds for 20 years.
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