Savings bonds good Idea?

Question

i am 18 years old. are savings bonds a good idea for me or are they a waste? should i just stick to a savings account? or do both? which would be wiser for me in the short and long run..

thanks for your time and help

Answer 1

If you are planning on starting a savings account for withdrawal more than 5 years from now, some types of savings bonds may be a good choice for you. The EE bonds are not currently paying as much as the I (inflation protected) bonds. Start by reading the attached information from the US treasury and then consider starting with some I-bonds. I buy them every year and think that they will be a good long term investment that is completely safe. Despite what other posts may say, I-bonds do pay at least the inflation rate, and it is guaranteed.

Bank savings accounts are safe for your investments, as almost all are government insured. However the interest rates are usually lower than I-bonds, and the bank savings rates can change at any time.

Answer 2

Have your parents open up a brokerage account, this will open up a large variety of investment options. Right now savings bonds offer less interest than inflation. Some corporate bonds offer higher rates but at a higher risk. Treasury bonds offer the lowest risk of any bonds though, when it comes to dollar denominated investment risk. High yield bond funds provide a safer way to get the higher yield of high yield bonds, but with added diversification, which will significantly reduce the risk of getting wiped out or suffering a large loss. The current earnings yield of the stock market (s&p) is comparable to medium to high yield bond rates; in the short term though (quarters), earnings are coming down, over the long term (decades) though, earnings for such indices grow faster than inflation.

Answer 3

I would go into a fidelity or a T Rowe Price branch, and tell them everything.  How much you have, how much you want, how much you want to contribute to your account monthly/quarterly/annual.  Ask them all the questions you can.  Cause Bonds/savings accounts our always a good way to earn a little, but its more like protecting your money, while just beating out inflation.  At 18 the CFP are going to tell you to be more risky than that (Your not 55).  

Last thing, if you walk into a place, and you don't like the person, tell them thank you, but you don't want your current money or future money going to them and then walk out.