Retirement Plan

U.S. savings bonds are certainly a safe place to save money, but you want to make sure that you’re putting money into bonds for the right reasons. Remember, the interest rates can be higher than a typical savings account, but there may be some liquidity concerns to contend with first. If there is a chance you may need access to the money inside of one year, keep in mind that you cannot redeem a savings bond until one year has elapsed. In addition, you will forfeit three months’ interest if you redeem a bond prior to five years.
Even with interest rates generally higher than your bank account, savings bonds should not make up a significant portion of your long-term savings. Compared to other long-term investments like stocks in your retirement account, the interest earned is quite low. Stocks historically return between 10-11% on average per year, so investing for your future solely in savings bonds will probably not yield the best results.
Savings bonds should be considered for financial goals somewhere between five and ten years away. After five years you may redeem the bonds without penalty, but hanging onto bonds for much longer than ten years and you could probably see better returns with other investments.