I admit I haven’t bought EE Bonds since then but when I look at them right now, I’d say they are attractive enough to at least look at as part of your super-safe allocation.
Today, they pay a fixed rate of 0.1%, and that’s the permanent fixed rate. But that’s irrelevant. Under the current EE Bond terms, your original face value automatically doubles after 20 years. That’s equals a 3.5% return, tax deferred. Not exciting, but better than the 2.3% currently paid by a 20-year Treasury, and also better – by 80 basis points! – than the 2.7% currently paid by a 30-year Treasury.
I have been wondering for awhile why the Treasury retains the 20-year doubling term. Is it out of whack with the market. Is it possible the terms of EE Bonds could change?
I’ve posted an analysis of my thinking over at SeekingAlpha.com: