Well it's not an earth shattering decision but I thought this could be fun to discuss.
I've less than $1500 face value left in EE bonds that I bought circa 2003 which earn... 2.06%
So it's not like it's a lot of money in the grand scheme of life, but here's my dilemma. I've an opportunity to use the bonds for qualifying tuition so I would not have to report the interest as income on my 1040 next year.
Were I to do this, I would simply take the cash I was going to spend from the savings account in question and buy I bonds with that money and use the bond proceeds for the tuition bill.
It's equivalent to cashing out the EE bonds and buying I bonds with the proceeds but not having to pay taxes on the interest. But it's such a small amount of interest really, and I'm currently in a very modest tax bracket, it's not as if it represents some tremendous savings, and having anything that's as safe as an EE bond that earns 2% in this low interest rate environment is hard to give up.
Still I've resolved to buy no more EE bonds, not because I think they're bad but because I feel a combination of I bonds for cash I don't need right now and Money Markets, savings accounts, etc. to keep cash I do need right now available are adequate for my needs. Why add something extra? And it's not like holding it adds much meaningful diversification to my cash.
Still, I feel weird about cashing it in when it's a guaranteed 2% and Vanguard Prime is paying around 0.01% with no foreseeable increase in yield in sight.
Cash in or hold on?
Moderator: Global Moderator
Re: Cash in or hold on?
I would hang on to the bonds.
Hanging on to things in life (other than worthless junk) is harder to do than it sounds.
Hanging on to things in life (other than worthless junk) is harder to do than it sounds.
Q: “Do you have funny shaped balloons?”
A: “Not unless round is funny.”
A: “Not unless round is funny.”