savings bonds

Articles & Advice on Bonds > Bond Guru Tip - April 2008

Buy More Savings Bonds - Right Away

A Bond Guru Tip published April 2008

Most people have seen interest rates plummet within the past few weeks. The stock market is gyrating up and down like a roller coaster on a daily basis. However, the current high interest rates being earned by savings bonds have not been affected - yet.

If you purchase a series 'I' savings bond today, it will earn interest at the annual interest rate of 4.28%. Series 'EE' bonds will earn interest at the annual interest rate of 3.0%.

And, while savings bond interest rates are scheduled to change on May 1st, if you purchase a savings bond today, the interest rate is 'locked-in' for the next six months. This means that a bond purchased anytime this month (February, 2008) will continue to earn interest at the above mentioned rates through the end of July, 2008.

Due to a change made by the Treasury Department in of May 2005, series 'EE' bond rates are 'locked in' for the first 20 years. In today's uncertain interest rate climate, this will continue to stay as a superb interest rate. And, when you consider that savings bonds are never taxed at the state or local level, and reporting interest income earned by savings bonds is deferred until you cash them in, (or they reach final maturity - whichever comes first), savings bonds continue to be the best investments one can make in today's turbulent economic times.

However, don't wait too long to buy your savings bonds. While Treasury normally adjusts rates on May 1st and November 1st each year, there is no law that states that they can't adjust rates anytime they choose. In fact, Treasury has made changes to policy and/or interest rates in mid-period on a number of occasions in the past.

So, the message is clear: buy some savings bonds right away - before the window of opportunity to earn superb, guaranteed interest rates - closes.

Jack Quinn - CEO -

2022 Route 71 - Suite 200
Spring Lake Heights, NJ 07742

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