aryadhana Posted August 12, 2020 Share Posted August 12, 2020 TreasuryDirect. Nominally, they are 30-year Treasuries with abysmal coupons: 10bps for bonds issued since at least 2015, and even that only because they probably run into floating point errors if they paid any less. They also can't be sold, and incur a penalty if redeemed within 5 years. But! Treasury guarantees that for an electronic EE Bond with a June 2003 or later issue date, after 20 years, the redemption (cash-in) value will be at least twice the purchase price of the bond. If the redemption (cash-in) value is not at least twice the purchase price of the electronic bond as a result of applying the fixed rate of interest for those 20 years, Treasury will make a one-time adjustment at the 20-year anniversary of the bond's issue date to make up the difference. Individuals are limited to a maximum purchase of $10,000 every calendar year. That's a government-guaranteed yield of 3.5 percent over 20 years, sold at a 40 percent discount to fair value, and yielding a 2.5 percent premium to the equivalent duration Treasury bond. (i) Purchase $10,000 of Series EE Savings Bonds for 20 years; (ii) thereafter, recycle half of each maturing bond to satisfy that year's purchase limit; (iii) use the remaining proceeds to fund your Roth contributions for the rest of time (which contributions will be capped at $10,000 by then). Start buying these for kids when they are born and they will be vested into their own $10,000 universal basic income by the time they grow up. Link to comment Share on other sites More sharing options...
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