Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
EE bonds
Old 10-03-2023, 10:31 PM   #1
Dryer sheet aficionado
Landolink's Avatar
 
Join Date: Jul 2021
Posts: 27
EE bonds

Not sure if this is discussed specifically on the site but we bought EE bonds from 2006 to 2022. First business day of the year. Today I redeemed the 2022 and 2021 purchases. Donít plan to redeem any more but wondering what others are thinking. Basically plan to buy the 10, 20, and 30 year auctions coming up. Thoughts? Iím 58 and 30 x expenses.
Landolink is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 10-03-2023, 11:30 PM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 16,964
My EEs are going to start hitting 30 years early next year.. time to cash in..


I bought for 2 or 3 years when I first started working but never after that...


I am just not interested in them and have not been for a long time... I think you can get better yield with not much extra risk so if I were conservative that is where I would go...
Texas Proud is offline   Reply With Quote
Old 10-03-2023, 11:54 PM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Sunset's Avatar
 
Join Date: Jul 2014
Location: Spending the Kids Inheritance and living in Chicago
Posts: 16,315
Quote:
Originally Posted by Landolink View Post
Not sure if this is discussed specifically on the site but we bought EE bonds from 2006 to 2022. First business day of the year. Today I redeemed the 2022 and 2021 purchases. Donít plan to redeem any more but wondering what others are thinking. Basically plan to buy the 10, 20, and 30 year auctions coming up. Thoughts? Iím 58 and 30 x expenses.
Would it benefit you to wait the full 20 years so the bond is worth double the value, if that applies to the ones you bought ?

"We guarantee that the value of your new EE bond at 20 years will be double what you paid for it."

I'm thinking since EE bonds only pay 2.50% for currently purchased ones, there are a lot better deals out there.
__________________
Fortune favors the prepared mind. ... Louis Pasteur
Sunset is offline   Reply With Quote
Old 10-04-2023, 06:18 AM   #4
Thinks s/he gets paid by the post
gauss's Avatar
 
Join Date: Aug 2011
Posts: 3,512
Back in 2020 or so, when interest rates were very low, I purchased the maximum EE allowed for myself and DW for 2 years in a row.

My thought was that if I hold them 20 years then the YTM would be over 3% given that EE are guaranteed to double in 20 years. This rate seemed quite good compared to the low long term rates in effect at the time -- The EE's were issued with a nominal interest rate of 0.1%.

I suspect that it may make sense to redeem them early and purchase Treasury Bonds at current interest rates even though I would forgo a few years of 3% interest opportunity costs.

I am under the impression that I can easily redeem these electronic bonds early in my treasury direct account and receive the cash proceeds. (Can anyone confirm this?)

-gauss
gauss is offline   Reply With Quote
Old 10-04-2023, 06:40 AM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
JoeWras's Avatar
 
Join Date: Sep 2012
Posts: 11,607
Quote:
Originally Posted by gauss View Post
Back in 2020 or so, when interest rates were very low, I purchased the maximum EE allowed for myself and DW for 2 years in a row.

My thought was that if I hold them 20 years then the YTM would be over 3% given that EE are guaranteed to double in 20 years. This rate seemed quite good compared to the low long term rates in effect at the time.

I suspect that it may make sense to redeem them early and purchase Treasury Bonds at current interest rates even though I would forgo a few years of 3% interest opportunity costs.

I am under the impression that I can easily redeem these electronic bonds early in my treasury direct account and receive the cash proceeds. (Can anyone confirm this?)

-gauss
Yes, to redeem, it is a simple click of the button.

At 3 and 4 years, it means you have to wait 17 or 16 years for the doubling, which when it happens is effective rate of 3.5%.

I would redeem these and chase something else long. The market rate of a 20 year treasury is 5.1% today. Assuming the coupon payments are reinvested in just about anything, it should be a no-brainer. Or, use the coupon payments for living expenses.

Which reminds me... The coupons pay 2x per year so you will have income. They don't defer like savings bonds. This can be good or bad depending on your circumstance.
__________________
Retired Class of 2018


JoeWras is offline   Reply With Quote
Old 10-04-2023, 07:40 AM   #6
Thinks s/he gets paid by the post
gauss's Avatar
 
Join Date: Aug 2011
Posts: 3,512
Thanks for the confirmation JoeWras.

I was thinking of investing in zero-coupon/STRIPS to simplify things and avoid reimbursement risk.

-gauss
gauss is offline   Reply With Quote
Old 10-04-2023, 08:49 AM   #7
Recycles dryer sheets
 
Join Date: May 2015
Location: Charleston, SC
Posts: 449
Back in the day, I used some EE bonds to fund my daughter's College Tuition. They were considered Tax Free if used for that purpose.

Does that Tax Free status still apply to EE Bonds cashed this year??
__________________
You don't need a weatherman to know which way the wind blows.
FiveDriver is offline   Reply With Quote
Old 10-04-2023, 09:04 AM   #8
Thinks s/he gets paid by the post
gauss's Avatar
 
Join Date: Aug 2011
Posts: 3,512
Quote:
Originally Posted by FiveDriver View Post
Back in the day, I used some EE bonds to fund my daughter's College Tuition. They were considered Tax Free if used for that purpose.

Does that Tax Free status still apply to EE Bonds cashed this year??
According to this site, the education exclusion still exists if you meet all of the conditions.

Note that there is an income cap based on AGI.

-gauss
gauss is offline   Reply With Quote
Old 10-04-2023, 09:29 AM   #9
Recycles dryer sheets
 
Join Date: May 2015
Location: Charleston, SC
Posts: 449
Thanks gauss. We're under the AGI cap, so....alles ist schoen.
__________________
You don't need a weatherman to know which way the wind blows.
FiveDriver is offline   Reply With Quote
Old 10-04-2023, 09:34 AM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
easysurfer's Avatar
 
Join Date: Jun 2008
Posts: 12,910
My final EE bonds I purchased during megacorp payroll deductions just matured. Drops mic.
__________________
Have you ever seen a headstone with these words
"If only I had spent more time at work" ... from "Busy Man" sung by Billy Ray Cyrus
easysurfer is online now   Reply With Quote
Old 10-04-2023, 01:49 PM   #11
Dryer sheet aficionado
Landolink's Avatar
 
Join Date: Jul 2021
Posts: 27
Quote:
Originally Posted by gauss View Post
Back in 2020 or so, when interest rates were very low, I purchased the maximum EE allowed for myself and DW for 2 years in a row.

My thought was that if I hold them 20 years then the YTM would be over 3% given that EE are guaranteed to double in 20 years. This rate seemed quite good compared to the low long term rates in effect at the time -- The EE's were issued with a nominal interest rate of 0.1%.

I suspect that it may make sense to redeem them early and purchase Treasury Bonds at current interest rates even though I would forgo a few years of 3% interest opportunity costs.

I am under the impression that I can easily redeem these electronic bonds early in my treasury direct account and receive the cash proceeds. (Can anyone confirm this?)

-gauss


I redeemed 2022 and 2021 purchases yesterday. Proceeds should be in my Cap 1 account tomorrow morning. Vey easy.

I donít plan to redeem any more.
Landolink is offline   Reply With Quote
Old 10-04-2023, 01:53 PM   #12
Thinks s/he gets paid by the post
gauss's Avatar
 
Join Date: Aug 2011
Posts: 3,512
Thank you!
-gauss
gauss is offline   Reply With Quote
Old 10-04-2023, 05:02 PM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 16,964
Quote:
Originally Posted by gauss View Post
According to this site, the education exclusion still exists if you meet all of the conditions.

Note that there is an income cap based on AGI.

-gauss

I have to find the one that are for one issued almost 30 years ago... hoping that it still works for DDs expenses... it did a few years back on DS education...
Texas Proud is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Bond Allocation - Mixing in Preferred Stocks, High Yield Bonds, & Foriegn Bonds DawgMan Active Investing, Market Strategies & Alternative Assets 39 02-18-2018 05:32 PM
Are CDs and Short Term Bonds Cash or Bonds ? Live And Learn FIRE and Money 33 01-27-2014 09:46 PM
Cash, CDs, Short term bonds, I-Bonds and ER Income nun FIRE and Money 9 04-27-2013 04:29 PM
EE Bonds vs. I Bonds daystar FIRE and Money 1 01-08-2012 12:45 PM
Muni Bonds - Calif State University Revenue Bonds - 2008A. Disappointed FIRE and Money 0 03-24-2008 10:25 PM

» Quick Links

 
All times are GMT -6. The time now is 04:17 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2023, vBulletin Solutions, Inc.