Conference nyoss1::market_investing

    Well,
    
    1. I think you can only buy EE bonds through payroll deducts.  HH bonds
       cannot be bought for cash anyway - I think you trade matured EE's
       for them somewhere down the road.
    2. They come to you via U S Mail, showing up a few weeks after the end
       of the month they are purchased for.  (May bonds show up late June)
       (This doesn't hurt, though...you can't sell them for 6 months.)
    3. Yes, there is a limitation on the income.  I think it's AGI...also,
       the bond must be bought in "your" name, and "spent" for "your
       dependents' education."  Cannot be bought in childs name. I don't
       know exactly what the limits are, but I expect they will increase
       every year to adjust for inflation.  Check the relevant tax form, or
       take a peek in Pub. 17.
    4. No, banks don't charge a service fee.  (At least, none that I've
       ever used.)  However, not all banks will cash them for you.  Call
       around to check banks in your area...some will only cash them if
       you're one of their customers. 
    
    SteveSov

Payroll deduction offers 2 choices for savings bonds: A. $50 (face) or B. $100.
For long-term (>10 yrs) college savings, is there a preferred choice?

    
    	Re: .2
    
    	If you are really concerned about maximizing every last penny worth
    of interest, then it would make sense to go with the lower denomination
    bond.  Lets say you went for the $100 bonds and were putting aside $8 a
    week.  Over the course of three months, you'd average getting one bond
    in two of those months and get no bond in the third month that your
    bond balance was below $50.  If you were getting the $50 bond, then
    you'd average two bonds in each of two of those months and one bond in
    the "off" month that you would have otherwise gotten none.  Since your
    interest doesn't start to accrue until the bond is issued, it makes
    sense to try to lower your average "bond balance" that is sitting
    around waiting to be invested.  On the other hand, of course, getting
    $50 bonds means you'll have twice as many bonds to store and ultimately
    take to the bank/college/whatever.  Both choices are good ones unless
    you're going to be putting aside a small amount like $2/wk and have to
    wait a half of a year to get a $100 bond.
    
    								-craig

    I have a question on U.S. Savings Bonds. One of my vehicles to save for
    kids college fund.
    
    Is it a good idea to cash in US Savings Bonds every five years or so
    to get the market-based interest or guaranteed rates whichever is
    more, or hold until maturity?
    
    Of course in cashing in one would automaticaly buy into new EE bonds and
    start the loop all over again.
    
    Also if one holds bonds until maturity or beyond does the bond keep on
    increasing in value or does it stop?
    
    Frank
     

    
    	Re: .4
    
    	One thing to remember -- if you are in a position where you qualify
    to cash in the Savings Bonds tax-free when your kid(s) go to college,
    you only get that tax-free benefit if you cash it in _when_ you are
    paying their college bills.  If you cash it in, perhaps, 2 years before
    the college bills start for whatever reason, those gains are fully
    taxable.
    
    	That said, there is one situation in which I can see cashing out
    Savings Bonds and buying new ones: if interest rates have really spiked
    up and you think they are going to come back down.  The minimum
    interest rate that a bond can get is locked in the day the bond is
    purchased.  Today's bonds, for example, have a minimum of 4% (I think,
    it was just dropped).  If bond interest rates climb up to 10% and then
    back down to today's level of rates, a EE bond purchased today will
    sink back down to paying low interest rates.  If, however, the minimum
    rate is increased to 7% when the current rate is 10%, cashing out your
    "minimum 4%" bonds and buying new bonds effectively raises your minimum
    interest rate up to 7% even if the rates do drop back down to where
    they are today.  You do have to trade this higher minimum interest rate
    against having to pay the accrued interest that you get when you cash
    in the first set of bonds.  If you're going to be able to cash in those
    bonds tax-free in the future, then its probably not worth it.  If
    you're not going to use those bonds for college bills, then it might be
    worth "taking your lumps" now to lock in the higher interest rate.
    
    							-craig

>    you only get that tax-free benefit if you cash it in _when_ you are
>    paying their college bills.  
    
    ... and _if_ the law still provides for tax relief at that time;
    something you should be quite leery about depending on.
    
      John

    I recently signed up for Savings Bonds via payroll/
    Got my first batch of bonds in the mail today.
    
    One bond per envelope (sequential serial numbers).
    
    I've directly purchased EE bonds before, and I received them all in 
    one envelope. Given the number of bonds the gov must sell monthly and 
    the associated postage costs, anyone have any idea why they aren't
    batching the mailing up?
    
    Dave