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Any reason to hold on to EE bonds?
Old 08-28-2005, 02:43 PM   #1
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Any reason to hold on to EE bonds?

Earlier this year, I foolishly bought some EE bonds right before the treasury dept changed their interest rate from floating to fixed. My thinking was that the treasury was doing this do save money, so I should jump in and grab the floating rate bonds before it was too late. Of course, now those EEs are paying a paltry 3.5% which is even less after taxes (deferred for up to 30 years, but still). I have plenty of I-bonds that I'd like to keep.

My question is, should I cut my losses and cash the EEs in as soon as the year holding period is up, eat the 3-month interest penalty, and put them to use someplace more productive? I would keep these funds in a low risk investment, like the vanguard intermediate term muni fund which is yielding about 4% tax-free (5.0% effective pre-tax). I would DCA in to avoid getting hosed by any sudden shifts in the yield curve.
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Re: Any reason to hold on to EE bonds?
Old 08-28-2005, 03:07 PM   #2
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Re: Any reason to hold on to EE bonds?

These are EE bonds that actually float, or the new screw-the-investor fixed ones? If they really are floating, then I'm not sure it is worth cashing them in.
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Re: Any reason to hold on to EE bonds?
Old 08-28-2005, 03:16 PM   #3
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Re: Any reason to hold on to EE bonds?

Yes, I have a bunch of the floating rate EEs, purchased in April before they went to the fixed rates in May. You still think they're worth holding on to?

Also, can I just send you (brewer) a check and have you manage my money? Oh, and can you manage my career for me too? I'd like to outsource as much as possible to the master...
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Re: Any reason to hold on to EE bonds?
Old 08-28-2005, 05:13 PM   #4
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Re: Any reason to hold on to EE bonds?

I agree that the EE bonds are worth keeping.
These bonds will rise as interest rates rise, it's the new EE bonds that you buy at a fixed rate.

Should rates rise over the years your bonds rise if rates fall you have the option to cash them in.

But not now.
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