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Financial
Focus
provided by Michael J Haynes
Edward Jones Investments
Are You
Hanging On To Expired Savings
Bonds?
 You
can lose track of the time. You can lose track of
your car keys. But you'd never lose track of your
investments. Or would you?
Actually, many people do just
that - at least when it comes to their U.S. Savings
Bonds. In fact, owners failing to redeem their
Series E, H and HH bonds are losing an estimated
$300 million a year in interest from matured bonds,
according to the Bureau of Public Debt.
While you may not be sitting
on $300 million yourself, you may well have a few
savings bonds sitting around the house. These bonds
have long been popular as gifts, but, over time,
people misplace them - or forget about them
altogether. On the other hand, some people
deliberately hold onto their savings bonds,
believing that they'll keep earning interest
forever.
However, that's not the case.
Once your bonds reach final maturity, they're not
going to pay you any additional interest, no matter
how long you hold them.
Even so, you might think that
it's no big deal to hang onto your bonds. After
all, they're issued by the
Treasury, so you know that you will be able to get
your money someday. And that is true, of course,
because the U.S. government is the most reliable
borrower in the world. As one of its bondholders,
you can be sure that you'll get your money.
But that's not really the
point. By holding on to your matured bonds, you're
depriving yourself of the interest that's due to
you. And by not taking this money, you're missing
out on the opportunity to invest it elsewhere.
Remember, even though your bonds are safe, they no
longer earn you any interest. They now have a zero
percent rate of return - and you don't have to look
too hard to find investments that can probably do
better.
Even if the money from your
savings bonds doesn't add up to a great deal, it
can still be a valuable asset. Before you invest it
- in fact, before you invest any money, from any
source - consider your individual needs, your risk
tolerance and time horizon. Then, if
you decide to keep the money in a fixed-income
investment, you might want to consider an
investment-grade corporate bond. While the value of
this type of bond will fluctuate, it will likely
earn a considerably higher rate than a savings
bond. Or, if you already own some stocks, but you
want to further diversify your portfolio, you might
use the proceeds from your savings bond to buy a
few shares in a high-quality company.
The point is to do something
with the money. If you're going to achieve your
long-term objectives, you'll need to maximize your
resources.
So, get out those old savings
bonds, bring them to
your bank and cash them in. If you're not sure if
your bond has stopped paying interest, visit the
Bureau of Public Debt's Web site at
www.savingsbonds.gov. In short, wake your bonds
from their slumber - and put them to work for you.
MICHAEL
J. HAYNES, Branson West Missouri, is an investment
representative with Edward Jones
Company.
(417)
272-8881
Copyright © 2002
Edward Jones
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