My parents bought me EE Bonds as a youngster and I still have some of them (i.e. I physically own them). I think the conventional wisdom in my family was to wait until they were worth their face value to sell them, but at today's rates they're maturing sooooo slowly. (They were issued in 1998 - 2002 and they're earning aprox 0.72%)
Am I being impatient, or should I sell them at their current value (anywhere from 67% to 83% of their face value) and invest the proceeds elsewhere (i.e. according to my allocation strategy)?
(I'm aware that selling them is
a taxable transaction)
Thanks!
Update:I did a bit of research on the
treasury direct website and learned the following:
17 years after the bonds were issued (for me, that starts in 2 years), they reach "original maturity" which means that no matter what rate of return they're earning, the gov't guarantees that they'll be worth their face value.
So even though they're earning a dismal rate right now, if I hold them until "original maturity" it will be like revisionist history because they'll suddenly be worth their face value. That's an effective 4.1% compound return, more along the lines of what I'd expect an asset like bonds to be earning.
It's still not cut and dry (since my portoflio on average is earning a lot more than 4%) but just some additional information in case others are faced with the same decision.