What to Do With Old Series EE Savings Bonds, #149
Series EE savings bonds have been around for over three decades. Many of you either own them or have owned them in the past. On this episode, I’m answering a listener’s question about whether Series EE bonds are still a good investment. We’ll dive into what they are, how they differ from I bonds, and what to do (if anything) with old EE bonds.
You will want to hear this episode if you are interested in...
What are Series EE savings bonds? [2:37]
Examining the difference between Series EE and Series I bonds [5:45]
Should you redeem your old Series EE bonds? [11:14]
Are Series EE bonds still a good investment? [14:25]
All about Series EE bonds
The U.S. Treasury issues two types of savings bonds: Series EE and Series I. Series EE is a non-marketable interest-bearing bond. Meaning it can't be traded in the open market, and you have to purchase them through the U.S. Treasury website. These bonds don't pay regular coupon interest, so it's possible that some of you have never actually received money from these bonds unless you’ve intentionally redeemed it.
As far as redemption goes, you have to wait at least one year before cashing them in and five years to do so without penalty. After five years, Series EE bonds can be redeemed at any time for their full value and held for up to 30 years. All EE bonds issued after June 2003 come with the guarantee that they will be worth at least double the value you paid for them if held for 20 years. And EE bonds issued after May 2005 earn a fixed interest rate determined when the bond is purchased.
Understanding the difference between EE and I bonds
To understand what to do with EE bonds, you first have to look at how they differ from I bonds. I bonds are composed of a fixed interest rate determined at issue, and a variable rate determined as measured by the Consumer Price Index Urban (CPIU) every six months. One of the reasons I bonds have gained recent popularity is the “I” stands for inflation. Due to the high inflation we've experienced in the U.S. over the past few years, I bonds paid as high as a composite rate of 9.62% in May of 2022.
Unlike Series EE bonds newly issued after May 2005, the interest rate changes every six months. In contrast, EE bonds allow you to lock in your interest rate for up to 20 years. Another big difference is that Series EE bonds are guaranteed to at least double within 20 years, whereas I bonds have no guarantee. The only guarantee with an I bond is whatever the fixed interest rate is. IF there is one at the time of purchase. So which savings bond is right for you, and what should you do with old EE bonds? Listen to this episode to find out!
Resources Mentioned
Get 25% off of my Retirement Readiness Review online course until June 1st with Promo Code: RETIRE25