Selling certain savings bonds improves your overall portfolio profits.
Depending on the type of savings bond, its age and its interest rate, you may profit by selling it and reinvesting the proceeds in a different investment. Savings bonds appeal to investors looking for a stable return even in volatile markets. If you sell savings bonds, optimize the returns of your investment portfolio by selling the right savings bonds and doing so at the right time. Always execute your sell decision in light of your present priorities.
Instructions
1. List the savings bonds you own by date and type. Make separate lists for EE bonds, I bonds and HH bonds if you have more than one type of savings bond in your portfolio.
2. Check your lists for bonds that are more than 30 years old. If so, they no longer earn interest. Redeem mature bonds and reinvest the proceeds in another investment. You have nothing to gain from holding them, and you lose potential earnings by not selling them.
3. Check the dates of Series EE bonds, if you own any. Dates from May 1995 to April 1997 usually pay less than 2 percent. Bonds pay 1.4 percent interest or less if they were issued after April 2008. Reinvest the proceeds in something that pays a better return.
4. Consider inflation forecasts as you analyze your Series I bonds, if any. Series I bonds combine a fixed interest rate with a fluctuating inflation premium. It functions as a hedge against inflation. According to Bankrate.com, hold onto I-bonds if the inflation rate rises faster than bond interest rates. If the inflation rate is not rising faster than bond interest rates, consider selling.
5. Study your list of Series HH savings bonds, if any. Series HH bonds are no longer sold. When they were sold, Series EE or Series HH bonds were exchanged for Series HH bonds to extend the period of time before gains on the bonds would become taxable. Therefore, if your income situation has changed, maybe due to retirement or layoffs, and putting you in a lower tax bracket, this may be a good time to redeem your HH bonds, while your tax rates are low.
6. Examine the date interest accrues on the bonds you plan to sell. For example, bonds accrue interest twice a year if they were issued before May 1997. Hold your bonds until a day or so after the date interest accrues before redeeming them, if possible. It maximizes your earnings.
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