Since I was a small child, my grandparents have given all of their grandchildren savings bonds on our birthdays. I'm not sure if it makes a difference, but they are always "EE" series. I had to use some of mine while I was in college (one of my scholarships didn't go through one year), but I have one left from 1993 and all of them from 2005 to present. It seems to me that bonds are very slow to grow and often have pitifully low interest rates.

Can you think of any other form of investment that is as stable (or almost as stable) but gives better returns? I'd like to recommend a more fruitful investing form to my grandparents.

  • 2
    Welcome Artemis!
    – Zephyr
    Dec 21, 2009 at 13:34

3 Answers 3


I have several as well, (acquired the same way as you) and I am happy with the idea. They are very stable and that is the reason they pay so little. I don't think you can get a low risk and medium (or high) return. The interest does reset every six months so you do get a bit of the market, should the fed set interest rates higher, you bonds will eventually reflect that.

Bonds and Certificates of Deposit are just one element of your investment portfolio. Put the money you can't lose into bonds, the money you can into higher risk stocks.

Bonds are great from our grandparent's perspective because they are NOT going to lose value. (My grandparents were depression era folks who wanted that stability) They are trivial to give as gifts. Most other investment forms require a heavy bit more of legal work I would think.


You may be thinking about this the wrong way. The yield (Return) on your investment is effectively the market price paid to the investor for the amount of risk assumed for participating. Looking at the last few years, many including myself would have given their left arm for a so-called "meager return" instead of the devastation visited on our portfolios.

In essence, higher return almost always (arguably always) comes at the cost of increased risk. You just have to decide your risk profile and investment goals.

For example, which of the following scenarios would you prefer?

Investment Option A Treasuries, CD's
Worst Case: 1% gain
Best Case 5% gain

Investment option B Equities/Commodities
Worst Case: 25% loss
Best Case: 40% gain


EE bonds purchased today pay a fraction of a percent in interest annually. But, on the 20th anniversary of the purchase date, a one time interest payment is made such that the value of the bond will be twice the purchase price. That figures out to to an interest rate of more than 3.5%. This is a not bad interest rate.

I bonds right now are even better.

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