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Does this even make sense anymore? Like say if I wanted to make low risk investments for retirement savings...would buying a $500 EE bond every year make sense? Or is it just a waste of money seeing as though it takes 30 years for the interest to fully accrue and you get taxed when you cash them in?
MrRational yes I see what you're saying. In this situation it would be for a 30 year old.
I put away $500 a month in a savings account that I never touch. I don't like having my money in retirement accounts or anything that will penalize me in the event that I need to use the cash. Bonds were the only thing I could think of.
My wife bought EE Bonds for about 30-years. We cashed some of the lower interest ones in about a year ago (1-2%); and held onto the higher interest ones 3-4%. As it turns out, most of the older ones mature in 20+ years, at which point they simply stop growing. These hardly qualify as an 'investment', even though many folks treat them as such.
You need to invest in equities if you want to retire - otherwise you need to save 50% of your income since bonds don't even keep up with inflation in most cases.
MrRational yes I see what you're saying. In this situation it would be for a 30 year old.
I put away $500 a month in a savings account that I never touch. I don't like having my money in retirement accounts or anything that will penalize me in the event that I need to use the cash. Bonds were the only thing I could think of.
If you want the flexibility of taking money out of a retirement account, then you should open up a Roth IRA. You can't take out the growth, but you can take out your contributions at any time without penalty.
I recommend a mutual fund such as Vanguard Wellesley Income for this purpose. It has been around since 1970 and has only lost money 15% of the calendar years since then. It has much better long term returns than savings bonds. It's 60% investment grade bonds (corporate & government) and 40% dividend paying stocks (typically more conservative, less volatile stocks). Its returns have been in excess of 7% for the most recent trailing 1, 3, 5, 10, & 15 year periods...although I expect future returns to be lower because of very low interest rates from the bond portion of the portfolio.
I also agree with everything ncole1 & Mr. Rational said.
Last edited by mysticaltyger; 01-24-2015 at 07:27 PM..
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