My husband's parents recently gave him US Savings Bonds purchased for him when he was a child. They matured from 1967 to 1993 and have a face value between $3,000 and $4,000. We had a baby in December and would like to put that money aside for him. Should we cash in the bonds or hold onto them? How do we figure out what they are worth? How should we invest the money for our son? In his name or ours?
M.S., Alexandria, Va.
When you talk about reaching maturity, "do you mean the bonds have reached their 'face value' or the point where they no longer earn interest?" asks Daniel Pederson, author of "Savings Bonds: When to Hold, When to Fold."
The final maturity date on bonds issued after December 1965 is 30 years, says Mr. Pederson. If still earning interest, they are paying between 4 percent and 6 percent.
Any bank should be able to value your bonds. You could also use a calculator provided by the US Treasury at www.savingsbond.gov, or contact Pedersen, who for a fee provides a valuation service, at 800-927-1901.
If you redeem any bonds, you will have to pay federal taxes on earnings. Pedersen says you have three basic options: 1. If the bonds are still earning interest, retain them. 2. If you want a conservative investment, cash all or some, and invest in Treasury I-bonds, now paying 6.49 percent interest. 3. For a more aggressive investment, go with stock mutual funds.
Whichever you choose, invest in the child's name to keep taxes lower, Pederson says.
My father, who does not use a computer, purchases a few stocks through a broker, and pays about $100 a trade. Could I, or my brother, trade for our father if we have an account set up and put the stocks in his name? How do payments for an online broker work?
L.H., via e-mail
Wow! Online trades, at E-Trade, for example, start as low as $14.95. Some online services charge even less. According to an E-Trade spokesman, you can go to any online broker and set up a joint account, with your father as the "primary" holder.
Online accounts can be opened for about $1,000 to $2,000. If you use your father's money, for tax purposes be sure to specify that in the online-broker agreement, he says.
Questions about finances? Write:
The Christian Science Monitor
500 Fifth Ave., Suite 1845
New York, NY 10110
(c) Copyright 2001. The Christian Science Monitor