Who here thinks savings bonds are a good idea? I'm not talking about just in general. I mean as an investment option. I guess I'd been sitting on one since shortly after I was born that my dad bought me, and I was thinking about buying my own. I don't make a lot of money, but maybe if I could just spare $25 a month, I could buy one monthly, or when I get extra money, say for Christmas. My uncle gives me $100 every Christmas and on my birthday ever year. I've been reading a lot about them, and the one I have is collecting 4% interest and will reach full maturity when I'm 30. Now, I don't have kids, and I don't plan on having any. They're just for me and my husband because I'm thinking that by the time we get old enough to retire, retirement and/or social security will probably no longer exist. Any advice or input would be greatly appreciated. Also, I'm probably going to go to the bank tomorrow and ask about setting up an IRA. Contributions to a traditional IRA are tax deductible, so that's well worth looking into. My husband and I live pretty simply, but my only concern is that I work a minimum wage job. I'd imagine that investing probably isn't something you want to do when you're below poverty level, but I really think it could be worth a shot. I already have on my W-2's that I'd like my taxes withheld at a higher rate so that I can avoid spending too much.
While it's good to get a refund come tax time, all you're doing by having a higher withholding is giving the government a 0% interest loan for a whole year. You could take all that money and put it towards your savings bonds and let that money make you money. It's tricky getting your taxes adjusted so you only owe or get returned a small amount, but it's worth it. I don't think anyone gives out 0% no-strings loans. Why let Uncle Sam hold on to your hard earned dollars for free? Savings bonds are a good option. The ones that take longer to mature give better returns.
My parents spent 18 years buying me savings bonds thinking that they'd pay for my entire college education. And they probably would have-back in 1995. When we cashed them out, they didn't even cover half the tuition for one semester, much less room and board.
Yeah, the one my dad got me was originally $25, and it only collected another $60. They don't pay out a lot, but I'm not really looking for them to. I guess what I'm looking for is some small investments since I don't make enough to go big. ---------- Post added 12th Nov 2013 at 10:05 PM ---------- Yeah, I was thinking about getting some 25 or 30 year ones if I could so they'd be fully mature when I get to be in my 50's. Just a little something in case I need it. Just some money to sit on for later.
These are definitely good questions! First, let me just say...it's great you're being responsible! I think that, first and foremost, you need to take advantage of what's being offered to you. If your job offers any matching or retirement program, go for it! If not, then go talk with your bank. I'm not sure the stipulations....I thought about setting something up for myself, but it came up to more than I wanted to spend per month (solely because I don't work but a day or so a week during school.) The only thing that I have to say about savings bonds is that maybe you could also focus on the near future, too? Would you be able to put money into a higher interest account, in case you needed to use it? I'm definitely not saying you should save and then go buy a new tv, but you never know what life will bring you.
If you google US Savings Bonds you'll see the interest rates and other information. They're about as safe an investment as you'll ever get but the rates are lower than other investments. The follow the basic economic principle of "low risk, low return". But interest rates on just about everything are extremely low right now and have been for quite some time. Municipal bonds are generally safe if you stay away from places like Detroit and may pay a little higher rate. You can also look for bonds that were sold years ago when interest rates were higher. Sellers may need the cash. You may pay more for them but they'll mature sooner because they're older.
Yeah, I'm going to be putting some money in savings, too. The savings bonds will be paid for with extra money. I work in fast food, so I'm going to be working until I die if I don't start saving. IRA's seem pretty good except for maybe the amount I'd have to put away every month. ---------- Post added 13th Nov 2013 at 04:30 PM ---------- Yeah, savings accounts suck nowadays. I still have one, but it's mainly so I don't spend too much money and so I have said money available for emergencies. I didn't think about looking for bonds that other people bought a while back. I'm going to have to look into that. Thanks.
First my disclaimer: I'm NOT a financial advisor and have NO experience in the banking or other financial professions. Just a frugal old curmudgeon who learned a few things driving over the pot holes in the ride of daily life. You mentioned IRAs. They're one of the best investment tools in existence. Especially a Roth IRA. You pay the taxes up front and they grow for years IF wisely invested. When you get older you can withdraw TAX FREE. I can't believe the politicians aren't frothing at the mouth trying to figure out ways to get their slimy hands on all that $ in Roth IRAs. I've heard the following many times from different sources but can't prove it without doing the math: If an 18 year old began annual contributions of the same amount to an IRA and stopped at age 29, they would have more $ at retirement than someone who started at age 29 and contributed until they retired. Imagine the potential amount of $ you could accumulate toward a comfortable retirement if you started at age 18 and continued to do so until retirement. One more thing to consider: long term care insurance. Buy a policy while you're still fairly young. The premiums will be much lower than if you wait until you're older and will remain the same as long as the policy stays in force. If you wait until you're older you may not be able to afford the premiums. Nursing homes can suck $ faster than a greedy politician. One last thought: My favorite lesbian is Suzi Orman. Smart woman, pay attention. I'll leave it there rather than risk getting in trouble with the mods.
*sigh* If only 18-year-olds didn't all think they were going to live forever and never planned ahead. I have a producer's license for life, accident, and sickness insurance policies in the state of WV, and I know that it's best to get life insurance policies either when you're 18, 90, or in your 20's. But not a term policy. Those will fuck you over even though they're more affordable at first. What you want is a whole life policy, or straight life. But if the name of a policy has the words, "flexible" or "adjustable" in it, DO NOT get it. Whole life policies are great because your premium never goes up, and it's good your entire life. At any given point, if you need to get a new car or send kids to college, or whatever, you can borrow against the value of the policy. The best part? These pay out 100% of the time at full value whether you've paid the full value or not. And if you live to be 100, kudos! You can cash out the policy! ---------- Post added 14th Nov 2013 at 12:09 PM ---------- But I digress, I'm not a financial expert either. Dropped out of college twice and never took any finance or accounting classes even.
I would disagree with you on life insurance. I've only had term policies. They're the best value. I've had a policy I bought about 20 years ago. If I croaked it would have been enough to put both kids through college and leave their mother financially comfortable. Now that the kids can take care of themselves we don't need that much but keep it because the premiums are low for a guy whose close to 70. When it runs out in a few years I'll decide whether or not to keep it. They can't cancel it but the premiums may double or even triple. If I'm still healthy I'll probably drop it but if I may be dead in a couple years I'll keep it, bite the bullet and pay the premiums. As soon as I'm gone the family will get a nice chunk of $. In that situation I'd probably tell the kids to pay part of the premium if they want the payout after I'm down to room temperature. The same goes for mortgage insurance. You're better off with a term policy. That way your survivors will have the $ to continue making the payments. It's better than having a house that's paid for but no cash on hand. Then you have to sell the house to get some needed $. As far as borrowing against a life insurance policy goes, bad thinking. That's not what life insurance is for. There are better ways to save money.
The premiums on the term policies is often what gets people. But I actually suggested a 20 year term to my uncle since he's almost 60. I felt kind of bad doing that because he's my uncle, and I don't want to think about him dying, but he asked for my help. He's in pretty good health for his age, though, so I'd imagine his premiums wouldn't be terrible. I'm 100% for whole life for younger people although I admit, I don't have one, but yeah, borrowing against the value of the policy should be the last thing you try to do if you can get a loan elsewhere. The company I used to work for had a killer whole life policy though. I mean, this is probably the best policy anyone could ever get, but here's the catch: They work exclusively with unions.
