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Series EE saving bonds
Old 08-20-2008, 11:45 PM   #1
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Series EE saving bonds

I have quite a few Series EE savings bonds. The savings bonds were accumulated over quite a few years and have a large range of interest rates. (from less than 2% up to almost 7%).

My thought is to cash the lowest yielding bonds first (from the savings bond wizard program) I do have some HH bonds as well, but hadn't planned on doing anything with them.

I'm hoping to reduce the amount of S&P index fund I'm currently pulling down to supplement my pension.

Is this a reasonable approach?

Rick
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Old 08-20-2008, 11:54 PM   #2
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When stock values decrease, many folks choose to sell other things in their portfolio to cover their living expenses rather than sell the stocks at depressed share prices. This sounds like what you are doing, right?

If so, selling the EE bonds to meet your expenses might be a good idea. The proceeds from the bonds are free from federal taxes if used to pay for college expenses for your kids--are you in a higher tax bracket, and is this benefit something you can take advantage of in the future? That's just about the only factor I can see that would argue for holding onto the bonds for awhile longer. Otherwise, it probably makes good sense to part with the ones yielding the lowest rates first.
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Old 08-21-2008, 04:46 PM   #3
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When stock values decrease, many folks choose to sell other things in their portfolio to cover their living expenses rather than sell the stocks at depressed share prices. This sounds like what you are doing, right?

If so, selling the EE bonds to meet your expenses might be a good idea. The proceeds from the bonds are free from federal taxes if used to pay for college expenses for your kids--are you in a higher tax bracket, and is this benefit something you can take advantage of in the future? That's just about the only factor I can see that would argue for holding onto the bonds for awhile longer. Otherwise, it probably makes good sense to part with the ones yielding the lowest rates first.
No, no benefit there. Thanks, I'm think Im going to go ahead and convert them to electronic bonds then I can be ready to do as I need.

Thanks!
Rick
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Old 08-24-2008, 08:44 PM   #4
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Originally Posted by rickier55 View Post
I have quite a few Series EE savings bonds. The savings bonds were accumulated over quite a few years and have a large range of interest rates. (from less than 2% up to almost 7%).
My thought is to cash the lowest yielding bonds first (from the savings bond wizard program) I do have some HH bonds as well, but hadn't planned on doing anything with them.
Is this a reasonable approach?
They are still paying interest, right? IIRC they stop doing so after 30 years, both the EE & HH, but hopefully the Savings Bond Wizard would direct your attention to that...
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Old 08-24-2008, 08:55 PM   #5
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They are still paying interest, right? IIRC they stop doing so after 30 years, both the EE & HH, but hopefully the Savings Bond Wizard would direct your attention to that...

Oh yes, I've already exchanged the earlier bonds that had reached their final maturity.

I'm slowly going through process of converting to electronic bonds. I was going thought to idnetify those with the lower interest rate, and was surprised at how the interest rate fluctuated, and then how it seemed to vary so much from the yield. I started going through the site trying to sort through that, and found how involved it is to determine both interest rate and yield. It's simple to find it for a specific bond, but if you're trying to make broad categorizations, its not easy. Some early bonds are fixed, some are fixed until orignal maturity, then variable, some start variable.

I ended up just going through my inventory and culling out those where the next interest rate to be posted was the lowest. And when It comes time to redeeem, I'll make a scond pass to make sure I'm redeeming one that just had interest posted, rather than one that would post post shourtly after I cased in.

Thanks,
Rick
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Old 08-24-2008, 09:04 PM   #6
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The proceeds from the bonds are free from federal taxes if used to pay for college expenses for your kids--
Just to be clear on this, the tax free angle is only true after a certain date, which I can't remember at the moment. I know this because I couldn't use my EE Bonds tax free to pay for DD tuition, they are too old. The reason for not including ALL dates I never have understood.
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Old 08-24-2008, 10:54 PM   #7
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Just to be clear on this, the tax free angle is only true after a certain date, which I can't remember at the moment. I know this because I couldn't use my EE Bonds tax free to pay for DD tuition, they are too old. The reason for not including ALL dates I never have understood.
I think the date is Jan, 1990. And yes, I had quite a few bonds purchased prior to that and was unable to get the tax break for using them for daughters tuition. The Saving Bond wizard flags those bonds eligible for this.

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