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Posted: 5/10/2002 3:57:46 PM EDT
Are savings bonds a good investment.  I mean should I be buying a $50 or $100 savings bond each month?

Also, tell me what you know about savings bonds.

thanks in advance
Link Posted: 5/10/2002 4:14:09 PM EDT
The total stock market will give you a better return over the long run.  A reputable mutual fund will also give you enough diversity that you won't lose big if one of your fund holdings turn out to be an "Enron".

However, if you are dead set against taking any market risk, there are plenty of safe bond funds out there as well.
Link Posted: 5/10/2002 4:32:41 PM EDT
The total stock market will give you a better return over the long run.  A reputable mutual fund will also give you enough diversity that you won't lose big if one of your fund holdings turn out to be an "Enron".

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No, no, no, no, no.

You are thinking about the old days when that was true.  Things are different now, and even after the months of carnage in the bear market, stocks are STILL wildly overpriced.  There is a long way to go down, and potential upside is very slight.  

The main enemy of fixed income investments like bonds is inflation, and we're not seeing that now.  If anything we're seeing deflation.

However, I don't believe interest rates will be lowered.  If you buy bonds and interest rates rise, the value of your bonds decrease (LT is the real expert here).  This is most likely a bottom of interest rates.  The dollar has been sagging, making American investments less appealling to foreign investors.

My conservative advice is this:  Stash your savings in the highest interest-bearing money market funds you can find.  Highest ones I've seen are about 3% or so.  The rate they return should rise with prevailing interest rates.

Wait until stock valuations become sane.  This should be about the point where everyone who regularly contributed to mutual funds finally throws up their hands and vows never to invest in the stock market ever again.  This will be the point where there is widespread public fear and contempt for the stock market.  When there are newsmagazine covers about how awful and poverty-inducing the stock market is.

At this point (and it'll come a few years down the road) dump all your money into the stock market, and use The_Macallan's strategy of buying S&P 500 index shares which gives you a piece of the broad overall stock market, and buying them despite market fluctuations.

Buying now regularly now will get you eaten alive.
Link Posted: 5/10/2002 4:40:35 PM EDT
We use a Series I  for the Baby, they are bought at face value, the rate floats above prime and is now 4.4%. They start  at $50.
We use them a s gifts for my granddaughter and daughter. They are convient and you can even buy them online.
Link Posted: 5/10/2002 6:36:59 PM EDT
Total waste of money, buy collectable firearms as thay are a much better investment.
Link Posted: 5/10/2002 6:37:57 PM EDT
Link Posted: 5/10/2002 6:43:37 PM EDT
Total waste of money, buy collectable firearms as thay are a much better investment.
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Bonds aren't going to be banned in the perceivable future; guns on the other hand, just might go bye-bye in your lifetime.
Link Posted: 5/10/2002 7:40:05 PM EDT
What are the diff. type of savings bonds.  I have some that are series E and some that are series EE.  What are the other types?

Can someone explain this?  

thanks again
Link Posted: 5/10/2002 7:45:10 PM EDT
Link Posted: 5/10/2002 10:36:27 PM EDT
No, no, no, no, no.
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Let me revise my advice.  If you truly want to learn the different ways to invest and the possible returns and pitfalls, go to your bookstore and pick up a book.  There is even a "for dummies" book on investing that does a great job of breaking out investment terminology that is so confusing for investing newbies.  The info you will get there will be far more definitive and less confusing than the "yes it is / no it isn't" dueling banjo advice that you will get from the internet.

P.S. Yes, yes, yes, yes, yes.

My IRAs are sitting quite pretty right now because of the total stock market - far more than what I would have gotten from savings bonds.  But then again, it's your money and you can do what you damn feel want to do with it.  Shoot, invest in peanut butter (Can I say that?)  Just make an informed decision.
Link Posted: 5/10/2002 11:55:04 PM EDT
I have been buying savings bonds for my kids education for 14 years. During the same time my wife was investing money into a stock fund. Well this year when I needed some of the money to pay for private high school for my oldest son my bonds were still gaining ground. My wife's stock fund was in the toilet. Lesson is don't put all your eggs in one basket. MIKE.
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Be careful.  My mom found out when I started college that unless the kid buys them (pretty stupid since she bought them when I was 2) they won't be tax free.  Education bonds that is...
Link Posted: 5/11/2002 8:02:48 AM EDT
Do you really feel that investing in the national debt is a good idea. I do not.
Link Posted: 5/11/2002 8:10:02 AM EDT

If you held savings bonds during the high interest rates of the seventies and early eighties you made out quite well.  Now...I'm not so sure.
Link Posted: 5/11/2002 6:44:35 PM EDT
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