|
|
|
SAFE MONEY PLACES
COMPENDIUM
Spring
2008
|
Savings
Bonds Are A Terrible Investment Now
Altho I have purchased Savings Bonds in the past because they have offered
safety, tax deferral, minimum guarantees and usually rates that were at
least competitive with banks, I would not buy one now. The new long-term
rate on Series EE bonds is 1.4%. That's it,
and the 1.4% is locked in and will not change. Series EE bonds still
promise to return double your money in 20 years - an effective return of
3.5% - but if you take out your money early you would only earn 1.4%. In
actual dollars this means if you put $5000 into a Series EE Bond today you
would get back $10,000 in 20 years, BUT if you cashed in the annuity in 19
years and 364 days you would get back $6,602; this is equivalent to a
68% surrender charge!
Existing
bonds have also taken a hit. Any Series EE bond purchased in the last 11
years is currently earning 2.74%.
I used
to like I Bonds because they gave you a fixed rate of at least 1% plus
extra interest that was index-linked to the rate of inflation. But any I
bonds purchased today do not have an interest rate floor. If inflation
stays low I Bond returns could be much worse than
other safe money places because the fixed rate is zero. Today, it
does make sense to buy U.S. Savings Bonds.
The
May Penny Post
For the second May in a row the U.S. Postal Service is raising the cost of
mailing (altho their news release says they will “adjust” their prices
12 May I noticed that none of the adjustments were lower). Some of the
current and new rates:
| |
Now |
As of 12 May |
| First Class Letter |
41˘ |
42˘ |
| First Class Large Birthday
Card |
58˘ |
59˘ |
| Postcard |
26˘ |
27˘ |
| Large Envelope (2
oz) |
97˘ |
$1 |
In 2006 Congress gave Postmaster Potter the ability to
raise stamp prices whenever there is inflation so this may well become an
annual spring event.
|
Safe Money Sue Says
Although one should usually be suspicious of getting something
for nothing, the U.S. Government offers a free brochure through this link
66
Ways To Save Money with no strings attached.
|
Safe Money Places®