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Where is the "Best Place" For My Money Today?


"I have some 30 year bonds coming due and ready to reinvest either in my IRA or back into EE or I bonds.  I have about 15 years to go before becoming eligible to withdraw my IRA.  Any thoughts or speculation on how those will progress?"

I appreciate your question and will give you my opinion.  The most important point for you to consider is not whether EE or I bonds are currently a good investment.  What is most important is how these EE or I bonds fit into your investment strategy/plan.  All too often, I meet with clients that have many different investments in a variety of different places.  When asked why they made each of these investments, the most common answer is that it was the “best place” to put my money at the time.

Now “best place” can mean very different things to different people.  To some it may mean the place where they expect the most return because they got a hot tip from a friend or because they have thoroughly researched an opportunity.  For others it may mean a safe investment with a decent rate of return.  Given the safe nature of the Treasury bonds that you mention in your question, I am guessing the latter is true for you.

Now maybe I am off base regarding how I have interpreted your question, but it doesn’t appear as though you have a long term strategy in place for your investments.  It sounds as though you fall into that category of what is the “best place” now for my money since you have some bonds that are maturing.  My recommendation is to put together a strategy /plan for your entire investment portfolio.  Perhaps EE and I bonds are a part of that portfolio, perhaps not.  It is critical to having a plan based on more than just picking and choosing different investments based on the personal criteria you probably used when choosing the 30 year bonds in the first place.  I really do not like using this post for self-promotion purposes but putting together these sorts of plans that take a look at an individual’s or family’s complete financial situation is what I do to assist people in achieving their financial goals.

I also want to answer your question about speculating on the future of EE or I bonds.  The honest answer is I do not know what the future holds for these investments and would argue that nobody knows.  Within the last week, I heard two ‘experts’ each give the opposite opinion on what is going to happen to the bond market.  My argument is that bonds play an important role in a portfolio and most people should have some exposure to bonds.  The I bonds that you mention would serve you well in periods of high inflation.  You should have certain portions of your portfolio that will do well during periods of high inflation to minimize your inflation risk.  I bonds are one way of doing this.  The EE bonds are currently offering a fixed rate of return of 0.3%.  This is quite low and you could probably do better with equally safe investments such as FDIC accounts and have more liquidity.  The EE bonds could be used to fund education though I would argue that there are better investment options to accomplish that.

I hope you don’t mind that I refuse to speculate on how these investments will perform in the future.  That is not what I do since I admittedly do not have a crystal ball.  I really do not want to appear rude or dismiss your question.  I think a lot of people fall into the “best place” to invest right now and thought this portion of your question could benefit others.  Thank you for your question!