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  • U.S. Savings Bonds: Still a Great Way to Save

    This week is America Saves Week, a national effort to focus on the importance of savings. As grandmother would say, “it is not how much you make that matters, it is how much you save.”

    One of the most “American” ways to build savings is through U.S. Savings Bonds. But most people think of them as old-fashioned—the birthday gift you got from your grandmother (and as a 10 year old, you thought booooring!) U.S. Bonds, however, are still a very good way to save, and the way you can purchase them is changing.

    An easy way to buy bonds now is from your tax refund. Using IRS form 8888, you can “split your refund” and use part or all of it to buy a U.S. I Bond. The I Bond is issued at face value, unlike other bonds you may remember. A $100 bond costs $100, and interest is added to that amount. Its rate is reset based on the inflation rate. This feature– interest adjusted based on inflation–is something financial money managers seek for high-dollar portfolios for a reason: while inflation has been low recently, it is an economic fact of life and it will eat away at your savings.

    The current I-bond rate (in effect until April 30, 2013) is 1.76%–try finding a CD at that rate! Plus, you can buy one for as little as $50. There are no fees, they are guaranteed, and if you need money for an emergency, you can cash it out after a year.

    To bring attention to this opportune time to buy a bond, there is a national sweepstakes being held called “Save Your Refund.” Through a very simple on-line application, if you buy a savings bond through your tax filing, you can enter a weekly drawing for $250 (five winners a week) AND be included in the $25,000 grand prize drawing on April 19, 2013. This makes buying a bond not only smart, but fun. Check it out at www.saveyourrefund.com 

    When you purchase a bond via your tax filing, a paper bond will be mailed to you. This is now the ONLY way to get a paper bond because in January 2012, the U.S. Treasury stopped issuing them. This means the old-fashioned savings plan has gone electronic, and you must create an account on TreasuryDirect.com to buy bonds. It is not as easy as walking into the bank to get a savings bond, but in our next post, we’ll walk you through how to become a saver via TreasuryDirect.

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    WISER

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    WISER is a nonprofit organization that works to help women, educators and policymakers understand the important issues surrounding women's retirement income. WISER creates a variety of consumer publications including fact sheets, booklets and a quarterly newsletter that explain in easy-to-understand language the complex issues surrounding Social Security, divorce, pay equity, pensions, savings and investments, banking, home-ownership, long-term care and disability insurance.

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