Personal Finance Q & A

A Minor Problem: Protecting Bonds

Q I have been buying US savings bonds for my great-grandchildren to use for college. Much to my displeasure, I recently found out that the mother of one of them cashed in some of the bonds.

What can I do to make it impossible for anyone other than my grandchildren to cash in these bonds?

- J.G., Deland,

Fla.

A Unfortunately, federal regulations "allow the parent to cash a bond on behalf of a minor child," says a spokeswoman for the US Bureau of Public Debt.

But there is a way to make that difficult.

Savings-bond forms have a small section entitled "where to mail the bonds." On that section, says the Public Debt spokeswoman, have the bonds mailed to yourself. Put them in a safe-deposit box. That way, no one will be the wiser. When you are ready, turn the bonds over to the child.

For additional information, call the Bureau of the Public Debt at 800-480-6112.

Q What do you think of penny stocks?

- A.W.,

Tracy, Calif.

A Most stock experts avoid penny stocks - generally considered those selling for less than $5 a share - as risky and dubious investments.

Andrew Tobias in his investment book "The Only Investment Guide You'll Ever Need" says you are "all but certain" to lose money with them.

But they have their fans too.

"Generalizations are very bad, because you have to look at each and every [penny-stock] company," says Harry Eisenberg, who has just published a list of 500 penny stocks in "Walker's Manual of Penny Stocks" (800-932-2922, $45).

"Some penny stocks have real value, some are just not worth anything," says Mr. Eisenberg.

More than 8,000 penny stocks are traded in the US, he says, of which some 1,700 are listed on the Nasdaq market.

When buying penny stocks, always deal with a reputable broker to avoid scams that, Eisenberg says, have sometimes involved organized crime.

He recommends looking for companies with a steady revenue stream, financial solvency, and corporate longevity of 10 years or more. They should also be profitable or heading in that direction.

If you buy a penny stock, be sure you carefully monitor its progress.