Savings Bonds?

June 20, 2012 3:16 PM

Savings Bonds Filter: Which bonds should I sell or continue to sit on? Picture inside.

I'm going to go to college soon and want to have a good amount of cash to keep me afloat, and to invest in some stocks. I have collected these bonds from my birth and birthdays. But I don't know which bonds I should sell, and which to keep. :P Always like to hear what the nice people of Metafilter have to say. :P

The one that I'm really itching to sell back is the $1000 one, but with a 4.00% interest rate, should I continue collecting?

Here is the evaluation of all my bonds.

Thanks! :)

posted by NotSoSiniSter to Work & Money (5 answers total)

Sit on them all. Work for a couple months this summer and save your money. One, you'll make more on that interest than you will in the stock market. Two, you'll be glad to have that money once you're out of college. Three, having made the money through sweat equity, you'll be less of a spendthrift in college.
posted by notsnot at 4:00 PM on June 20, 2012 [2 favorites]

If you HAVE to cash them, cash the ones that have either matured (which is none of them) or the ones with the lowest interest rates first.

That said, I agreed with notsnot - it doesn't sound like there's a good reason to cash them now. If you're absolutely destitute and need $1000, cash it out, sure, but if it's there as a "cushion" well, it's still a cushion if it's in a bond form.

Also if you're just starting out and this is all you have, I would avoid stocks. Anything stable is going to give you a low return, and you're already getting that on your bonds.
posted by Lt. Bunny Wigglesworth at 8:57 PM on June 20, 2012

Cashing in the $1000 4% one would be very stupid, unless you are trying to buy back a stolen kidney or something.

The only ones I would cash in are the 0.81% and 1.12% ones. But that's like $250 or something. Bring in a bag lunch for a few weeks and cut out a few weekend bar trips or whatever you generally spend money on and you can recoup that before you start school without smashing the proverbial piggy bank.

The bonds are fairly liquid assets so they are not a bad emergency reserve. I would keep things as they are. Having most of your savings at 4%, risk-free? That's great -- you should be doing your best Scrooge McDuck impression. So there's your emergency cushion, and it's conveniently in a form that at least requires some work before you can break into it.

As to your other motivation, buying stocks, it will be difficult to outperform the bonds via equities with the amount of money you have to invest; without cashing in the $1k+ bond you'll be hard-pressed to meet the account minimums at many brokerages, and if you're only buying a few hundred bucks worth of shares at a time, you'll be paying terribly in fees. Also keep in mind that while the stock market may offer better returns, that comes at the price of higher risk. (Your 4% no-risk position is something that a lot of traders would kill their own mothers for, if they could do it on a larger scale.) So it would make no sense to sell any of the high yield bonds for stocks.
posted by Kadin2048 at 10:26 PM on June 20, 2012 [2 favorites]

Response by poster: Needed someone to give the "what about the long term" part of my brain a little kick. :P Yea definitely makes no sense to sell anything.

As for the stock stuff, OptionsXpress doesn't have a minimum account balance, and only charges for the trades. Going to invest in some larger companies and stay on board for a long time. Nothing super crazy, and I'm not expecting a big payout. :)

Thanks!! :D
posted by NotSoSiniSter at 10:43 PM on June 20, 2012

Best answer: Absolutely, take lower interest rates first. But do note that if you hang on for a few extra months, you will receive a big jump in interest. That September 1995 bond, for example, will mature in September 2012, thus crediting a decent amount of lump sum interest into your account. Original maturity is explained here.
posted by calwatch at 1:08 AM on June 21, 2012