Keep the Savings Bonds?

Are EE savings bonds the best investment vehicle for Tammy's money?

QUESTION: Tammy in Tennessee was in the military for five years. She received Series EE bonds, but she doesn't know if she should keep them. Dave has a better idea of what to do with them.

Dave's ANSWER: I would cash them in and do my own investing. The reason is very simple: It's just a very low rate of return. They don't pay anything and are not good long-term investments. It's like having your money in a certificate of deposit long-term.

When you are 17 and have them, that's better than spending the money, but the best thing you can do at any point in the process is to automatically draft your checking account instead of just taking it out of your check for bonds. Instead, do $50 a month into a good mutual fund in your Roth IRA. That would have been a better plan.

I would just use that money for further investing. Take the $2,700 you have in the bonds and invest it in a good mutual fund.

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