For a generation of proud relatives, savings bonds were the preferred birthday/graduation/bar mitzvah gift. (More remote relations often gifted the slotted cardboard folder stocked with $10 in quarters.)
If you've got a few oldfangled series EE or HH bonds in your sock drawer -- or as happened with one Fool, her mother finally handed her grandparent's college graduation gift more than 13 years after-the-fact -- here's what to do.
Be gracious: Write that heartfelt thank-you note that you should have penned when you still wore braces.
Figure out their worth: Using the Treasury Department's savings bond calculator, you can see what granny paid for the bond, the interest rate it earned, and what it's worth today (and even project its worth for a short time in the future by changing the "Value as of" date). All the information you need is on the front of the bond, including the face value, date issued, and serial number. The calculator lets you track an inventory of bonds and save your inputs. Don't have your bonds handy? See the site's FAQ.
Hold 'em or fold 'em: If the bond has not yet reached maturity, then it probably makes sense to hold onto it for two reasons: 1) You can pay penalties (e.g. three months of interest) should you jump the gun; and 2) There are tax advantages for patient bond holders. Tinker around with this tax calculator to find out.
"Spend" it: By "spend" we mean do some mental accounting with the money. Voila! You have an instant emergency fund! Though it might not be your preferred mode of savings, having your money tied up in a paper bond is a good deterrent if you tend to dip into funds accessible at your ATM machine. Plus, it's probably earning better interest than your measly bank account. Do some comparison shopping to find out.
Invest it elsewhere: If you've already got savings and are feeling a bit more risqué than Aunt Ida was, we've got plenty of resources to help you come up with investing ideas.
Pay it forward: Though it might not feel like it, you are probably encroaching on the adult generation of your family tree. Consider helping a niece or nephew, or a child of your own, get a head start on savings with a few rolls of quarters or with a gift of savings bonds.
