Author Topic: Cash out EE Bonds before Maturity to invest somewhere else?  (Read 1298 times)

JPWI

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Cash out EE Bonds before Maturity to invest somewhere else?
« on: March 28, 2014, 12:02:01 PM »
I'm looking for some mustachian advice on EE bonds. My daughters are 7 and 9.  Until about 3 years ago, they received EE bonds from their grandparents for birthdays and Christmas for college savings (they now get a check that gets deposited in 529 account).   

About 1/3 of the bonds were issued between 2006 and 2008 and have a fixed rate of 3-3.6% fixed.  The other 2/3 of the bonds were issued between 2009-2011.   These are earning 0.6-1.3% fixed. 

As I understand it, regardless of the rate, the value doubles in 20 years, which equals a 3.5% rate at that time.  Anything prior to 20 years is the fixed rate from time of purchase. 

I am considering a couple options and hope you can help.
1.  Keep the bonds where they are and wait the 20 years.  They will, however, begin college before the bonds mature. 
2.  Cash out on the later bonds that are earning low interest and invest in 529 account (or possibly Lending Club)
3.  ???

What do you all think I should do?

bevathome

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Re: Cash out EE Bonds before Maturity to invest somewhere else?
« Reply #1 on: April 10, 2015, 08:04:53 AM »
I was researching this same topic recently.  I came to the forum for opinions and landed on your inquiry.

My kids only have a few hundred dollars in bonds.  The guaranteed 3.5% rate isn't horrible and the principal never declines, so I'm planning on keeping the savings bonds and using them during the last year of college.