Wednesday, January 7, 2009

What’s working in your Investment Portfolio?

This past year has been brutal for equities across the board.  In times like these, when nearly everything is tanking, I can’t help but notice the miniscule portion of my portfolio in US savings bonds that is leading the way with positive returns.  I never thought I would see the day.  I have been purchasing savings bonds over the last 20 years mainly to keep my employer off my back.  Every year, the company recruits employees to canvass the masses and urge all to participate through payroll deduction.  I have been one of those canvassers and I can attest that convincing engineers of the financial benefits of bonds has always been a hard sell, so instead the canvassers tout patriotism!  Love America, buy a bond.

To track my bond holdings, I use a Savings Bond Wizard tool and it is currently reporting that many of my EE bonds purchased 10, 15 and even 20 years ago are yielding a whopping 5.6 %. I’m thrilled!  A snapshot example of the wizard screen is shown below.  For those of you holding savings bonds, the wizard software, available for download at the TreasuryDirect website, is an easy way to keep track of this newly, exciting asset class.  Once you have entered the serial number of each bond, the wizard will track it, provide accrual and maturity dates, automatically update to the latest rates and yields and provide the current dollar value of the bonds all free of charge.

This past year was a great time to be holding bonds, but what about previous years?  For some very interesting data check out this graph provided by The Savings Bond Advisor comparing the value of equal monthly investments in series I savings bond and the Vanguard Index 500.  The differences between the two over the last year are pretty dramatic, but the data also shows that savings bonds have been in the running over the last several years.  Hmmm, an investment paradigm shift may have finally arrived for at least one engineer.

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