Are Savings Bonds Good?

Dave tells grandpa to open up an educational savings account for his grandson, rather than a savings bond.

QUESTION: Listener’s grandparents want to give his son a savings bond for his first birthday. Dave likes the concept, but has a much better idea to save.

ANSWER: Open an educational savings account for their college savings, and you can deposit into that. You can open it with about $250 or $500, and granny can add to it later if she wants. The returns in an educational savings account invested in a mutual fund are about 12%, much better than a 5% savings bond.