Paul R. Cady

Good Bye U.S. Savings Bonds, Hello Stem Cells, Farmland and India

I was going to respond to Mickey's article, until I saw your comment. Mickey has obviously not done his homework. Buying I bonds through Treasury Direct is a great way to buy grandkids a good investment. I have bought my 9 year old granddaughter a $100 I bond every year
for * years starting in 2000. The I bonds have appreciated in total value,
for example, $100 I bond bought in 2000 as of 09/01/08 was worth $165.24, which is an annualized average return of 8.155%,$100 I bond bought in 20001 as of 09/01/08 was worth $147.88, which is an annualized average return of 6.84%,$100 I bond bought in 2002 as of 09/01/08 was worth $131.76, which is an annualized average return of 5.29%. The worst return I have gotten, so far, is 4.05% on I bond purchased in 2005. I can certainly live with these returns. I suspect thay get bad press because the dealers that represent the stock market view savings bonds as a threat to their crap game.

On Dec 23 10:12 AM Careful Investor III wrote:

> It always pays to be skeptical when reading the financial press!
> It is not unusual that the articles presented are written by inexperienced
> young people who earn a living by getting something in print. This
> article is a case in point. I bonds are currently paying 5.64% of
> compound interest that is not taxed until they are redeemed, and
> when they are redeemed the interest is only subject to federal income
> tax (no state tax). The bonds may be redeemed at any time after a
> year. It is true that there is a two month interest penalty for redeeming
> prior to five years, however this is modest in comparison to many
> CD's. The interest will be reset April 30 and may very well go down
> for the next six months, but will give the saver protection when
> the inevitable inflation comes back. The bonds are as good as FDIC
> insurance, and the $5000 maximum is not really true. You may buy
> $5000 per year in paper I bonds and an additional $5000 per year
> in bonds maintained in an on-line U.S. Treasury account. If you are
> married those numbers are doubled if you chose to buy bonds that
> are co-owned by your spouse.