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Hello,
Lots of my friends are having babies, and I'd like to set up some sort of annual b-day gift for the kids that will appreciate over time and be easy for me to keep up with (unlike the random junk I'm always desperately searching for in the toy department). When I was younger, my parents would buy bonds from time to time, and they really came in useful when I headed off to college.
Are bonds still a good way to go? Or is there a better (higher yield but still stable) alternative for this type of gift?
Treasuries are certainly very stable and easy to buy (TreasuryDirect). I hestitate to buy anything that may require much management of the long term so have given savings bonds.
Treasury bonds have the longest maturity, from ten years to thirty years. So its a nice and effective idea to buy them.. Go ahead with gifting children every year.
Regular savings bonds are convenient and a hassle free way to go. Some folks laugh at the lack of sophistication (and return) therein but it is reliable and requires almost no time and attention as a savings vehicle. I put two daughters through undergrad and grad school that way. A Treasury Direct account is also a newer alternative you might want to consider. Regarding prior comments concerning the viability of the US, "this too shall pass" --- America will survive and be better for it. People like you who plan to help kids get an education are the kind of people this nation needs. "May the winds be at your back."
Location: Stuck on the East Coast, hoping to head West
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I'd suggest checking with a tax advisor or at least reading up on them before buying. Generally if you buy series EE and I and use for qualified education expenses then you wouldn't have to pay tax on the interest. But these bonds would be in the parents' names and not the children's.
I love savings bonds--they're not exciting and many people consider them pretty boring, but that's what I love about them.
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