Savings Bond for Kids?

[lightbulbsun]

I want to start some savings for my god-child, and I remember that some family got me savings bonds when I was a baby, and when I graduated college they had matured and I was able to have a bit of money, which was super helpful. Is this something that people still do? Is there a better way to save some money for her? 

[mainelyfoolish]

You can’t buy paper savings bonds anymore, just electronic bonds through TreasuryDirect. The interest rate for EE bonds is terrible (currently 0.10%) unless you hold them for 20 years, in which case the government will adjust the earnings to make it worth double the purchase price. I bonds also have a terrible fixed interest rate at this time, but they also have an inflation adjusted interest rate so they are at least going to keep up with inflation.

If the parents have set up a 529 account for the child, you could make a contribution to that. Or just give the parents the money and let them figure out how best to use it for their child.

[lightbulbsun]

Ah, ok thanks for the info. I'll talk to her parents.

[Susie]

Yeah, don't do bonds.  Ask the parents about 529 contributions instead.

H had relatives who bought him series EE bonds as a kid "for college."  He's 42 now, and we still have several $k in immature bonds that we have to hang onto in paper form, track maturity dates, etc.  It's a pain, and so antithetical to my pursuit of a paperless life!  Some are earning 4% so we consider them the bottom piece of our e-fund that we don't plan to ever spend, and then when they mature we cash them and deposit into e-fund savings account.

Obviously it's only the youngest that are still not yet mature, but I don't think any of them were actually mature in time to help pay for college.  They were all basically only used as e-fund/financial security in adulthood.  I guess it was nice to have them, but it would have been more practical to just have less student loans.

[minzy]

The crap rates would give me pause, but I guess I’m a little nostalgic for bonds, since my grandparents gave me some when I was growing up. I wanted to get some for younger family members over the years, but we’ve just wound up giving a smaller gift and then money for most gift occasions. I think one family probably immediately blows it on stuff, and the other two likely save it somewhere. 🤷🏻‍♀️

[covergirl82]

Savings bonds suck. DH's grandpa gave the kids a few when they were babies (even though we told them we have 529s for the kids and they could give us cash or write a check and deposit it into their accounts) and now we have to file them away for decades until they're actually worth something.

I got a really long-term savings bond when I was 10 and was finally able to cash it in for face value plus interest when I was like 35. I can't remember if it was a $25 or $50 bond, but I don't think I got more than $100 at the time I cashed it in. I'm actually shocked I managed to keep track of it that long...

[ssmjlm]

They were great 35 years ago, now not so much.

-signed, five figures in still maturing savings bonds

[mich1]

Yeah.....I’m sitting on a stash of savings bonds that are still earning. Not as much as my investment accounts, but better than m6 savings account. I bought them 25+ years ago when they were earning 5% interest.

I wouldn’t buy them today, but when I bought them it was through an employee savings plan at work and since they are a PITA to cash, I never dipped into them.

[formerlyak]

DS has a few hundred in savings bonds that he was gifted when he was born. He turns 15 this summer and they have matured, so his plan is to cash them out and open an investment account with them. Fidelity has a new teen account, so that's what he chose. Maybe talk with the parents about opening an investment account for kids instead (they'd have to be the account custodians).

[tacokick]

Jun 2, 2021 11:21:21 GMT -5 ssmjlm said:

They were great 35 years ago, now not so much.

-signed, five figures in still maturing savings bonds

Yes! My mom and grandfather had a lot and as low income people they really paid off. Eventually! But there is no way they could have ever made or saved the amount of money we ended up with from the bonds.