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I have a question about savings bonds.?
There are two types of U.S. savings bonds: EE and I. I bonds pay 1.38% and EE bonds pay only .10%. In view of this enormous difference, why would anyone invest in EE bonds?
1 Answer
- Anonymous8 years agoFavourite answer
Because they are much cheaper.
The price you PAY for a Bond is far, far less than the face value....they become WORTH the face value when they mature (five, ten or thirty years down the road) and stop paying interest...
The yield on an I-Bond is linked to inflation, so you pay far more "up front" for that guarantee that you won't lose any spending power...
At your young age you shouldn't be buying bonds anyway, you should be investing in Growth stock mutual funds, which will be far more volatile, but over the long-term will earn you FAR better growth on average....If you invest $1,000 in I-Bonds today, then 30 years from now you will have $1,509
If you invest $1,000 in a Growth stock Mutual fund (and leave it alone!), it will grow most years & shrink some years,but overall will earn an average of somewhere between 6% and 12%, leaving you with between $5,743 and $29,960...
Why would anyone your age invest in Bonds at all?