What to do with Patriot Bonds?

[anothercog]

This board frequently has some good advice so I'm throwing this out there.

My son was gifted $500 face value worth of Patriot Bonds (Series EE) when he was a baby. He turns 18 next year. I just looked up the value and they appear to be earning 3.5% and current value is around $440.

Should he just hold onto them until they fully mature in 2035 or cash them in and invest in something else?

 

[mystang52]

Years back some EE Bonds had minimum interest rate. If these particular Bonds are paying guaranteed minimum 3.5%, that's a good rate for a cash-equivalent instrument. If your son cashes them in and "invests in something else" he may very well get a better return. Of course, potential of a better return means risk of loss as well.
He's only 18 years old. My vote is leave the Bond alone (assuming guaranteed minimum 3.5% rate). Remind him when he starts full time employment he should then begin a regular investment contribution via 401K or IRA that would incorporate predominantly equities.

 

[anothercog]

He started working this year and will max out what he can contribute to a Roth IRA. Also has a taxable account with money his grandparents gave him all invested in VTI. Plus he used some of his birthday money years ago to invest in Tesla. The kid’s net worth at 17 is more than what I had at age 30.

 

[Sunset]

It's a small amount of money, so doesn't matter what he does.
Earning 3.5% is a great rate today, so it would be $440 less he needs to keep in bank account for emergencies like major car repair.

 

[anothercog]

It's a small amount of money, so doesn't matter what he does.
Earning 3.5% is a great rate today, so it would be $440 less he needs to keep in bank account for emergencies like major car repair.

Good point. Though I think for a car repair he would likely be coming to the "Bank of Mom and Dad."