Instead of cash gifts for our grandchildren, we are considering savings bonds, in order to encourage them to save money. We recently read that Terry does not recommend government savings bonds. What are the alternatives to these bonds? Thank you.

Terry Says:  Sorry to say that Series EE and I bonds are no longer a good deal!  The government has changed the formula to fixed rates, instead of variable. So if you buy them now, you’ll be locking in today’s low rates for the long term.  Instead, open a 520 college savings account for them.  All the money will grow and come out tax-free if it is used to pay for college expenses.  I recommend going to either Vanguard or Fidelity and searching under 529 Accounts.  It’s easy to open an account, and you can add to it at  any  time.   And any child in the family can use the proceeds for college – –  any college, in any state!

PS  I’m about to post a new column in the next two weeks about how and when to “cash in” old savings bonds.  Some of them are very valuable so don’t dump them!