More on I Savings Bonds

I blogged about US Savings Bonds recently, but here is another nice article in the Wall Street Journal that sings the praises of the I Savings Bonds.  The I Savings Bonds are a great place to stash your emergency fund.  You can buy them at http://www.treasurydirect.gov/

A tip of the hat to: Shayne John

'Tis the Season to Give Financial Gifts to Children

Christine Benz of Morningstar recently published an interesting article called "The Best Ways to Give a Financial Gift to Children."  The article has good information for different ways to give a financial gift, but I might not classify them as the "best" ways. The article really focuses on more sophisticated ways to give larger amounts of money without letting the child spend it - at least not right away.

The article proposes 4 ways of gifting to children:

1. Set up a UGMA/UTMA account (Uniform Gifts/Transfers to Minors Act)
2. Contribute to a 529 Plan (college savings account)
3. Fund a Roth IRA (Individual Retirement Arrangement)
4. Give a financial knowledge gift (a basic finance book)

The article explains these 4 strategies pretty well so I'll let you read it yourself.  But, I'd like to add three simpler options below:

Bye Buy US Savings Bonds :(

Starting January 1, 2012 we will no longer be able to walk into our local bank and purchase a US Savings Bond - at least not the traditional paper form.  US Savings Bonds are NOT going away - they are only going to be sold in "electronic form" via www.TresuryDirect.gov

Here is the press release from back in July.

I have always liked the I Savings Bonds that guarantee an interest rate above inflation. They accrue interest but the interest is not subject to federal tax until you redeem the bond and is completely exempt from state or local income tax.  If you use the proceeds for education expenses, you may not owe any federal tax at all.