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This may be a basic question but I don't know anything about U.S. Savings Bonds. I don't know how long it takes until you can cash a U.S. Savings Bond, nor do I know their average rate of return. If given the option to choose ($25,000 Cash) or ($30,000 in U.S. Savings Bonds + $10,000 Cash) and given the current average rates of return how could I determine which selection would be the most profitable?

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  • How long are you willing to wait? I know you said you don't know how long you have to wait, but what is your time window. Where is this money coming from? You may have to pay taxes now. What are you saving for? College? Retirement? Jan 14, 2012 at 21:12
  • In any case, you are not going to loose $15000 in bonds in 2-3 years nor you can earn that much by investing $25000. The answer is go for the bonds. Jan 15, 2012 at 3:07
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    Note: until recently bonds were sold at 1/2 the face value. If the bond said $100 it cost $50. Now that they have switched from the paper bonds, they are now sold at full value. This switch took place in the last few months. After Jan 1 2012 no more paper savings bonds. Jan 15, 2012 at 22:13
  • @mhoran_psprep The question is somewhat hypothetical as it pertains to a sweepstake giveaway which offers prize options to choose from. My guess was that $40,000 would be the way to go but not knowing much about U.S. Savings Bonds was not sure if, for example, you had to wait years before redeeming the full amount. Jan 16, 2012 at 2:22

2 Answers 2

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According to the US Treasury, EE Savings Bonds reach maturity immediately, so a $30,000 EE Savings Bond can be redeemed for $30,000 as soon as it is issued. You will lose 3-months interest if you redeem before 5 years.

http://www.treasurydirect.gov/indiv/research/indepth/ebonds/res_e_bonds.htm

EE Bonds are the only bonds currently offered by the US Treasury, since 2004.

H Bonds, sold prior to 2004, reach maturity after 10 years.

http://www.treasurydirect.gov/indiv/research/indepth/hhbonds/res_hhbonds_hhratesandterms.htm

So, if they are EE Bonds, then take the bonds. If they are HH Bonds, you will only have to wait 2 more years, at most, to reach full maturity. Therefore, the answer should be take the bonds!

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40,000 > 25,000

Isn't it obvious? Unless you have an immediate need for cash that 10k can't solve, go for the bonds.

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