money

Savings Bonds and Investing,What Is the Best Way to Go?

May 5, 2009

I want to buy savings bonds for my children,what is the best way to go about doing that,through a bank like Bank of America,and how much is the minimum to put in there.I really don't know anything about them i just heard it would be a good investment and that you can put a time limit to it like they can't cash it out till they are 21 if you wish or older,what is the best way to start looking into that investment,or any suggestions on what i can set up like that?

Investments, Stocks, Bonds and All About The Money

{ 1 comment… read it below or add one }

John B May 5, 2009 at 11:58 am

There are a number of savings plans for children 529 plans (for college funding) and UTMA/UGMA accounts (uniform Transfer/Gifts to minor accounts). They both have some tax advantages. As for savings bonds they generally earn a low interest. If you account for inflation and taxes they generally have a break even or negative return rate (example 4% interest earned -1% taxes and 3% inflation). So I suggest a mutual fund the easiest pick is an index fund one that owns some of all the companies in the index (Dow, S&P, Russell). Stocks over many years have earned 10 to 11% that means about every seven years your money doubles. The best thing then is to start saving now. Based on this formula in seven years $1000 becomes $2000, in fourteen years $4000 and twenty one years $8000. With the savings bonds example your money doubles in about 18 years.

Leave a Comment

CommentLuv Enabled

Previous post: What Are the Best Types of Bonds to Invest In?

Next post: I Have a Bond Calculator and Can Compute YTM and TYC. ? How Do You Compute the Same for a Preferred Stock When