|
Viability of US Savings Bonds to Fund College
Saving for college has become a priority for many American families. With most university tuition rates climbing
every year at record pace, it can seem nearly impossible to send your children to a good college or university
without going into deep debt. But it doesn’t have to be that way. With a little planning, you can make your college
savings plan go a long way.
Using a US Savings Bond to Save for College
Many parents with young children wonder if it is viable to use US savings bonds as a savings vehicle for their
children’s future education. The truth is that a US savings bond can be a great way to save for college for many
families. Most US savings bonds offer competitive interest rates, and they come with the added security of being
backed by both federal and state governments, as well as being subject to certain income tax benefits from both
levels of government. Here is some information about saving bonds and what they can do to help you save money for
your child’s college education.
The Series EE Savings Bond
One of the most popular US savings bond vehicles that are purchased by parents who are looking to save money for
their children’s college education is a US savings bond from the series EE savings bond series. Analysts have
recently estimated that a US savings bond from the series EE that was purchased in 2006 will likely earn 3.2 fixed
interest rate percentages over the life of that bond.
The Series I Savings Bond – AKA the I Bond
What about the series I savings bond? It is also commonly known as the I bond. What is the difference between the
series I savings bond and a series EE US savings bond? The main difference is that the series I savings bond
carries an interest rate that is determined by the federal government. In general, the federal government
determines the interest rate for the series I savings bond by determining a basic low fixed rate, as of now that is
one percent, and then adding on an inflation rate to that that reflects the latest increases in the consumer price
index.
How to Make Your Money Grow with a US Savings Bond
Regardless of whether you choose an I US savings bond or a Series EE savings bond, here are some basic things you
should know about how to make your money grow. First, you should always wait at least one year before cashing in
your US savings bond. You should also know that in most cases you will forfeit at least three months interest if
you decide to cash in your US savings bond within five years of your initial investment date.
Tax Incentives of US Savings Bonds
In most cases, you will find that your US savings bond comes with many attractive tax benefits. For interest, you
will not have to pay taxes on your interest on your state tax form, and in many cases, your interest may also be
free from federal taxes.
Why a US Savings Bond May Be a Better Option than a 529 Investment
In most cases, analysts predict that a US savings bond will tend to perform better than many 529 college savings
investment plans. However, this strictly depends on what kind of 529 college savings investment vehicle you have
chosen. Some state 529 college savings plans will indeed outperform a US savings bond over the long haul. Much of
this depends on the condition of the market in future years, inflation trends, and a number of other fluctuating
conditions.
| 
Delicious
Google Bookmarks
Stumbleupon
Digg
BlinkList
Blogmarks
Facebook
Ma.gnolia
Reddit
Twitter
Yahoo My Web
Livejournal