Ask Terry Questions About savings bonds

About savings bonds

By Terry Savage on February 28, 2017 | Chicken Money

HI Terry, My name is Francisco and I have a question about a savings bond I have that I got from my local Institution/bank a few years ago. The amount I got was not much, as the value I got or paid for was only $50. What I would like to ask is what do I do with the bond now? I went to to see how much it is worth now but it says it's only $25, although that was through some calculator they had but I do not think it really told me what ito is really worth or where I can go to. I need advice as to how I go fonward with this and if I should cash in the bond to buy a new one or put it towards something else that will give me more investment in the long run. The bond I have is a Series I. The reason for these questions are that I do not know fully know how bonds work, meaning if they are good investment now compared to what I thought a few years ago.

Terry Says

OK, well you did a good thing purchasing a savings bond -- but these are LONG-TERM investments.  You don't get the full benefit if you cash them in early. So you must plan to hold this bond for at least 5 years to get the full interest rate, which is added to the bond value every six months.  That rate paid on the bond depends on inflation.  You started with a very low fixed rate, but every six months there is an "inflation adjustment" that is added to that low rate.  Don't worry about the value of the bond in between now and five years.  Just put it away safely. And if you want to keep putting small amounts of money away, you can buy more bonds in the future.  The interest rates aren't such a great deal, but putting the money away regularly is a very good idea.  Here is a link to the government website explaining Series I Savings Bonds.

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