Savings Bonds Explained: When to Buy, When to Cash In, and If They’re Still Worth It

32m
Budget better for group trips and explore if savings bonds still deserve a spot in your long-term investment plan.

How do you plan a trip with friends without blowing your budget — or your relationships? Are savings bonds a smart way to invest in your kids’ future? Hosts Sean Pyles and Elizabeth Ayoola discuss the emotional and financial dynamics of group travel and walk through what it really takes to invest in savings bonds for education and life goals. They begin with a discussion of traveling with friends, with tips and tricks on setting clear expectations, budgeting according to your values, and managing financial boundaries. Smart Travel podcast hosts Sally French and Meghan Coyle join Sean and Elizabeth to share their insider tips for group travel, including itinerary planning, respecting different budgets, and balancing social time with solitude.

Then, investing Nerd Sam Taube joins Sean and Elizabeth to break down the pros and cons of savings bonds, including Series EE, I Bonds, treasury bonds, and more. They discuss tax implications, bond yield mechanics, and how to incorporate bonds into a long-term investing strategy.

8 Best Online Brokers for Bonds: https://www.nerdwallet.com/best/investing/brokers-for-bonds

Planning your next vacation? Before you budget, learn how to get the most out of your travel dollars by following our Smart Travel podcast: https://link.chtbl.com/FvKHzKit

Want us to review your budget? Fill out this form — completely anonymously if you want — and we might feature your budget in a future segment! https://docs.google.com/forms/d/e/1FAIpQLScK53yAufsc4v5UpghhVfxtk2MoyooHzlSIRBnRxUPl3hKBig/viewform?usp=header

In their conversation, the Nerds discuss: traveling with friends, how to budget for group trips, friendship and money, planning trips with friends, financial boundaries while traveling, group vacation budgeting, how to say no to expensive trips, budget travel tips with friends, post vacation financial regret, peer pressure spending on vacation, savings bonds, series EE bonds, I bonds, treasury bonds vs savings bonds, when to buy savings bonds, how to cash in savings bonds, best bonds for education savings, bond yield explained, fixed income investments, muni bonds, corporate bonds, bond diversification strategy, investing in bonds for kids, bonds vs 529 plan, bond interest rates, bond tax benefits, how to buy savings bonds online, treasury direct account, cashing paper savings bonds, bond market trends, and how bonds fit in a retirement portfolio.

To send the Nerds your money questions, call or text the Nerd hotline at 901-730-6373 or email podcast@nerdwallet.com.
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Transcript

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Have you ever heard the saying that you don't know someone until you go on vacation with them, Sean?

No, but it makes sense.

What?

Are you living under a rock?

Okay, I'm just kidding.

All right, what about the one that traveling with friends can make or break a friendship?

Have you heard that one?

I haven't heard it, but I've experienced it, so I know that to be true.

But where are you going with this?

I'm going, Sean, to the topic of today, which is planning a trip with friends.

Welcome to NerdWallets Smart Money Podcast, where you send us your money questions and we answer them with the help of our genius nerds.

I'm Sean Piles.

And I'm Elizabeth Ayola.

On this episode, we're going to to answer a listener's question about whether savings bonds are a good investment.

But first, we are talking about traveling with friends.

We have surprise guests for you midway, so keep listening.

Sean, have you ever traveled with friends?

I've traveled extensively with my friends.

I have a core group of my pals from college and we've traveled around the country and internationally together and I feel really grateful to have this core group of friends who we've actually gotten deeper and reaffirmed our friendship through all the trips that we've been able to take together.

So it's been lovely.

What about you?

Oh, I love that.

I personally have gone on two trips with friends, and I think they were a mixed bag.

So definitely made some core memories, but definitely had a lot of learnings there.

But since we are the Smart Money podcast and we like to talk about money, I want to know about how you budget for a trip with a friend, Sean.

Now, on the two trips that I've been on, we usually just pay for things separately versus pooling money together and paying for the trip.

So how do y'alls usually do it?

I usually do a combination where I'm paying for my own airfare, I'm paying for my own hotel room.

But if we get something like an Airbnb, we'll pool our money for that.

And oftentimes, we will take turns covering different meals.

My friends and I like to be really generous with each other.

So, it might be, okay, I'm going to get this lunch and you'll get dinner and we'll.

I'll figure it out and it'll kind of come out in the wash.

We don't expect that of each other necessarily, but that's just how it goes.

And if there's one time where a friend maybe has a tighter budget, we'll pick up the slack for them and we don't worry too much about counting the pennies.

That's generally how we budget it and it's worked out so far.

I think that's such a testament to, first of all, how close you guys are and also how much trust you have with one another.

I remember on social media the other day, this lady was giving advice about how to save money.

And then she goes, you know, you don't need to always pick up the tab with your friends.

Just pay for what you ordered.

And I know that's like a controversial topic, but yeah, I love that you guys just help each other out and you have that kindness going.

I know that friendship trips for me, like I said, can be fun, sometimes a little stressful, but I think it really depends on the different personalities you have coming on the trip and also how they mesh.

But one thing I will say, Sean, is I've learned so many things about myself, about my friends, and about money through vacationing.

Yeah, I bet.

So what have been the main things that you've learned in these two trips that you did?

Two major themes are one, the importance of knowing and sticking to your money values.

And then the second one for me is the power of a budget.

Okay, I feel like there has to be at least one good story there.

So tell me about the values part.

What have have you learned and how did you learn it?

Oh my goodness.

Well, in terms of the values point, I would say the trip that I have in mind is one that I took to Majorca with some friends.

And I have learned that each person has different money values.

So some people, for example, may want to value experiences over shopping, right?

They might want to visit the malls and spend their whole day buying things, while someone else who maybe values more experiences may want to zip line, for example and what I've learned is those two things can be conflicting right

a clash of different values the clash of different values I know once I also went on a vacation with my friend to Miami while I was living in London and when I go on vacation I value rest and I will pay for restful activities but she values gallivanting nothing wrong with either of those things right but I will say we left that trip not talking because she got all upset with me because I didn't want to go out all the time and I got upset with her because she wanted me be going out all the time.

So definitely some headbutting.

And that speaks to the challenge of expectations on a trip like this.

You were each expecting that the person you were with would want the same thing as you on the same schedule.

And that's not realistic all the time.

It's not.

And also that brings me to my second learning, which is budgeting.

I think it's so important to have a budget for yourself and not to succumb to the peer pressure when traveling with friends of basically having to spend money on every single thing.

I will say that I started out, I have to be honest here, not having a budget when I went on vacation and just spending money on anything.

But I have learned that when you do that, you come back and you have post-vacation clarity when you look at all the money that you spent and realize that it was all you.

Talk with me about that post-vacation clarity a little bit.

Does that mean that you just went way overboard with your spending and maybe had to rein it back in severely when you got back or any regrets that you have from that or maybe lessons learned?

Absolutely regrets because like I said, I had no budget.

So it's like, oh, do you want to go on this excursion yes are we going to dinner every night absolutely right so i was cosplaying a rich gal while i was on vacation and when i came back i found that i was way behind in terms of overspending in my budget and just having to pull back on spending altogether so that i could keep up with my bills and everything else Yeah.

How do you budget for vacations now?

What's your approach?

Well, first of all, I look at how much money I have in my account for this said vacation.

It's a good place to start.

It is.

I ask questions.

So how much are all the excursions going to cost?

Right.

And then I'm honest with myself about how much I can afford to spend.

And I think a huge piece there is also communicating that to the people that you're going on the trip with.

I feel like some people maybe have shame around doing that because, you know, sometimes you don't want to be the one to say, I can't afford to do X, Y, and Z.

But it's so important to remember that, hey, if these are your friends, then they should be able to respect your boundaries around what you can spend.

And then there have been times, especially this year, I got two trip invites, one to Haiti.

I can't remember where the second one was, but I realized, hey, this doesn't align with with my budget and goals right now.

So I had to say no to the trip altogether.

And I'm not going to lie, as a recovering people pleaser, that was really difficult for me, but I'm proud of myself.

But that's a moment of growth.

So I'm proud of you.

Yes.

Thank you.

There's a lot of power in saying no.

And you saved so much money by saying no.

I absolutely did.

So now I'm going to popcorn to you, Sean.

And I want you to tell me about any of your vacation learnings when traveling with friends.

Kind of similar to what you mentioned around having different values, I've learned that flexibility and independence are really important when traveling with a group, and so is knowing your strengths.

I can use my recent trip to England with my friends as an example here.

So we went on this trip with my college friends to England to tour various gardens and also to go see one of my favorite bands, The Scissors Sisters in Concert.

And I went on this trip with one of my good college friends who's really organized and is a kind of encyclopedia of various gardens around the world, especially in England.

So she did this great job of cataloging various gardens and that was a huge help in just the logistics of our trip.

And I love to drive.

I'm kind of the default driver of the friend group.

So I was able to weigh in on what might be a reasonable driving itinerary.

I booked the rental car, and then I did the actual driving.

And between my friends' ideas of various gardens to go to and what I thought would be a reasonable route for us to take, we had some compromises on like which gardens we could actually hit, which ones we weren't going to be able to see, and would maybe get to next time.

And just because we know each other so well and we mesh so well as people, we were able to have that sort of open conversation and figure out the details in like a really harmonious way.

And that just speaks to, again, to our relationship and how good that is.

And then around flexibility and independence, before this became a huge garden tour vacation, it was all about that Scissors Sisters concert.

I bought tickets to the show, just assuming we were all going to go.

And when we were planning this vacation, my friend was like, actually, you know, I'm not really big on huge concerts.

They can be a little overwhelming.

And I totally get that.

You don't have to do everything together all the time.

Maybe you don't want to go to this museum or you just want to sleep in one day.

That's totally okay.

I think it's really important to communicate those boundaries, whether it's a personal boundary or a financial boundary, so you don't feel pressured into doing something you really don't want to do, which can cause you to resent your friends.

So, Sean, what you just said reminds me of a story of when I was in Majorca on that trip with my friends, and everybody wanted to go to the clerb.

And honestly, I didn't really want to go.

I was drained from spending all day with my amazing friends, and I wanted some quiet time, but I went anyway because of of peer pressure.

And in the middle of the clerbin,

I just left.

I just, I literally sped walked home and went to bed.

Ghost your friends.

I ghosted my friends and everyone's like, where is Elizabeth?

Where is Elizabeth?

Elizabeth went to bed.

I'm all for an Irish goodbye, but when you're out at the clerb, you got to communicate to your friends to make sure that they know you're safe.

So not

just leaving.

Yes.

And in a foreign country.

But obviously I have learned to communicate better and, you know, just say no to activities I don't want to do.

And it has made friendship trips a lot more harmonious.

That is a solid piece of advice.

Okay.

So we are going to bring in our surprise guests, the hosts of NerdWallet's Smart Travel Podcast, Sally French and Megan Coyle.

Welcome to Smart Money.

Hello.

Thanks for having us.

I hope you've been enjoying eavesdropping on this conversation.

This has been the greatest.

It's been fascinating.

This meeting of the podcast minds.

We're all here together for the first time.

Well, since you guys are such big travel nerds, I'd like to hear how you guys approach traveling with your friends in terms of like just being people traveling together and also financially.

Yeah, well, Elizabeth, I have to say your story about your friendship kind of not ending out so hot at the end of your trip, it speaks to me.

And it really made me realize that there are some people who are your best friends in your hometown where you live together and function on a daily basis, and they are not good travel companions.

But it goes the other way.

There are some people who I'm like, you're not like my best friend, but you're an amazing travel companion.

It's really interesting to see those differences.

Oh, I love that, Sally.

I've never thought about it that way.

And honestly, as an adult now, I want to do another friendship travel, but I'm also a little bit traumatized because I think it's so intimate to stay with someone for that many days, right?

And what if you guys drive each other insane?

But then, like you said, Sally, what if you love each other as travel buddies?

Yeah, you know, it's like dating.

It's like some people are incompatible as a partner in dating, but they're like a fine friend.

And then some people are incompatible travel companions.

One of my friends and I were saying someone should make an app where you just like Tinder swipe, but to find someone to travel with.

So free idea for any smart money listeners out there.

That's just, that's a free startup idea.

I don't know if I would trust a stranger on an app to travel with.

What if they murder me?

I know.

Oh my God.

Okay, Megan, what about you?

How do you travel with friends?

Oh man, I've done it all.

I've done like the one trip with your one best friend and we are still friends to this day.

So that worked out.

I've also done those giant group trips with all of my college friends.

And something resonated with me that you said, Sean, sometimes you plan a trip around a big event and then it turns out like not everyone is interested in said event or something like that.

So one thing I found that works really well is just giving everyone the itinerary pretty early.

It's like the person who cares the most about the event sends out like, okay, on this day, we're going to do this.

For me, recently I went to Chinquater with seven of my friends.

So it was a big group and we really wanted to do a boat day where you go see all these towns on a boat tour.

And some people said in the group chat, they were like, you know, I can't afford that.

That's really not in my budget right now.

And the good thing was we planned this early enough that they were able to plan other things to do that day that were just as exciting.

Like one of them hiked from every single town from the one most south to the one on the most northern end and had an amazing day.

So that would be my tip for groups that are going together is get that itinerary out early so people can make other plans.

And also I'll add that one of the best companions that you can bring on a group trip is a good book.

Because if you don't want to go out for your friends that day, you can just hang out and chill, read a book, and not spend a bunch of money on whatever you don't want to be doing.

Absolutely.

Well, Sally, Megan, thank you so much for coming on Smart Money and sharing your travel tips with us.

And if folks want to hear more travel tips, they should listen to our Smart Travel podcast, which is fabulous.

It is wherever podcasts are found.

Our pleasure.

Thanks for having us.

See you guys.

Bye, guys.

Up next, we talk about whether savings bonds are good investments.

But before we get into that, it's that time of the episode where we ask you to send us your money questions, because that is what the show runs on, after all.

Maybe you are thinking about traveling with friends and want to know how you can budget for that.

Or maybe you're thinking about how you can save money on upcoming holiday travels.

Whatever your money question is, we nerds are here to help you.

Leave us a voicemail or text us on the nerd hotline at 901-730-6373.

901-730-N-E-R-B.

You can also email us your questions at podcast at nervalet.com.

And a reminder that we want to help you with your budget.

If you want us nerds to poke around in your budget and give you some tips and strategies, head over to the episode description and click on the link to fill out the Google form.

All right, let's get to this episode's money question segment.

That's up next.

Stay with us.

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We're back and answering your money questions to help you make smarter financial decisions.

This episode, we have a couple of questions about bonds from our listeners.

We've been hearing more from our listeners about bonds lately, so we wanted to use this as a chance to do a little bonds 101, as well as answer our listeners' questions.

So to help us on this nerdy journey, we are joined by investing nerd and friend of the pod, Sam Taub.

Sam, welcome back to Smart Money.

Thanks for having me on again.

Sam, let's start from the TOP.

From the beginning, can you give us a quick explanation of what a bond is?

To start from the TOP, a bond is basically an IOU.

When you buy a bond, you're loaning someone, often a government or a corporation, your money.

And the borrower pays you back, often with interest, over a set period of time.

Bonds are an example of fixed income investments because the terms of the loan are fixed.

If you hold a bond to maturity, that is until the borrower is done paying you back, you know exactly how much you'll make off of it in both dollar and percentage terms.

And there are a variety of types of bonds.

Can you run us through a few of the most popular ones?

Treasury bonds are loans to the U.S.

government, which is one of the most trustworthy borrowers in the world, just due to the sheer size of our economy.

Treasury bonds trade on a market, just just like stocks, meaning you can buy or sell them at any time.

You don't necessarily have to wait until maturity.

Savings bonds are also loans to the U.S.

government, but they are non-marketable, meaning you can't sell them before maturity.

Many savings bonds have a provision that allows you to cash out early, but this usually means forfeiting some amount of interest.

It's kind of like a CD in that regard.

Income from both treasury bonds and savings bonds is exempt from state and local taxes, but it is federally taxable.

So those two are bonds that are issued by the federal government, but municipalities can also issue bonds as well.

And those are muni bonds, right?

That is correct.

Muni bonds are, as you said, loans to state or local governments.

Like treasury bonds, they trade on a market, so you can buy or sell them before maturity.

Now, muni bonds are a little riskier than treasury or savings bonds because unlike the U.S.

government, municipalities do sometimes go bankrupt and default on their bonds.

But that extra risk can also mean higher yields.

Plus, muni bond income is exempt from federal taxes.

If you live in the same state that a muni bond was issued from, it's usually exempt from state and local taxes as well.

And then can companies offer bonds too?

Tell me how those work.

Yep.

Those are called corporate bonds.

Those also trade on a market.

And like muni bonds, they're a little riskier because companies do sometimes go out of business and stop paying.

But as with munis, that risk can mean higher yields.

And corporate bond income, generally speaking, is fully taxable.

And when it comes to federal bonds, we often hear things like the yield on the 10-year treasury is X percent.

Can you explain what that means for us in plain language?

Usually when people talk about bond yields, what they're referring to is yield to maturity, which is a bond's annual percent return if you buy it and hold it to maturity.

That depends on the face value of the bond, that is the amount that you'll get when the bond matures.

And it also depends on the purchase price of the bond and also on the coupon rate or annual interest rate if there is one.

Most bonds are traded on a market, just like stocks, and typically you buy a bond at a discount for some amount less than its face value.

And the bigger the discount, the higher the yield.

Now, some types of bonds, such as short-term treasury bills, are zero coupon bonds, meaning they don't pay interest.

In that case, the yield is just based on the face value, the discounted purchase price, and the number of years to maturity.

Can you talk about what might make a yield go up or down in the bond market?

I'll use an example of something that makes yields go up.

If something freaks out the bond market, a recent example being the U.S.

government credit rating downgrade, that tends to make people sell bonds, which lowers their purchase prices and thus increases their yields.

That's why when investors say things like, The 10-year treasury yield just shut up to 5%.

They're saying that as a bad thing.

When yields suddenly go up, it usually means that investors have lost some degree of confidence in the borrower's ability to repay.

And the 10-year treasury bond yield going up to 5% is bad for the government, but it can be good for people who buy the bonds, right?

Because you're getting a better return on the bond.

That's correct.

Even after the recent downgrade, the U.S.

government still has an extremely high credit rating, and a default is still considered extremely unlikely.

So for the individual investor, it just means a higher yield, which is good.

Now, it's probably worth noting here, it's bad for the country because higher yields mean the government has to pay more interest, and that could eventually force us to cut spending and increase taxes just to afford the interest payments.

But that's kind of a later problem that individual investors can't really do much about.

We'll just keep kicking that can down the road.

Now we understand the basics of bonds.

Tell us, Sam, how can we fit that into our investing strategies?

Since bonds are fixed income, since you know exactly what your return will be at the time of purchase, bonds provide a level of certainty that other types of investments like stocks don't have.

Longtime listeners have probably heard us say things like, the average annual return of the stock market is 10% per year, but that's just a historical average.

We don't necessarily know what stocks will be worth in one or 10 or 20 years, but it's different with bonds.

The returns are predictable.

The downside of that is that bonds usually don't make you as much money as more uncertain types of investments like stocks.

10% per year is the average annual return of the stock market, but that would be considered really high for a bond yield.

So, Sam, would you say in that case that bonds can be great for diversification then to help manage risk?

Exactly.

A typical investment portfolio is mixed bonds, which give you that predictability, but usually kind of low returns, and stocks, which are less predictable, but generally make you more money over time.

And as people are trying to figure out how bonds might fit in with stocks as well in their own portfolio, a lot of financial advisors will suggest that folks who are younger and have more time until retirement invest primarily in stocks because of their potential for greater returns compared to bonds on average.

But as you get closer to retirement, bonds can be a safer, less risky investment.

Now that we are all caught up on what bonds are, let's get to the first listener question, which comes from Teal, who sent us an email.

Here it is, read by our producer, Tess Wiglund.

Hey nerds!

Hoping you can talk about savings bonds on your podcast.

My grandparents bought me a ton of savings bonds when I was a child, and I cashed them when I was in college, and they paid for all my textbooks, laptops, and even some living expenses during my six years in school.

I have young children, and it's unlikely we'll be in a position to pay for higher education for them, but would like to help them how I can with whatever they need getting set up in their young adult lives.

A car, college textbooks, furniture for a first apartment, et cetera, et cetera.

Here's my questions.

Are savings bonds even a good investment?

Are there better options?

We don't know for sure our children will even pick higher education and we want them to be able to have flexible spending options.

When is a good time to buy savings bonds?

When is not a good time to buy?

If they are a good option, how do you even purchase them?

Thank you.

Teal.

And thank you, Tess.

Okay, so our listener has the financial goal of saving for their kids' future education and maybe some living expenses, whether they go to college or another path.

There are a lot of different ways to save for this type of expense, but our listener is specifically interested in bonds, so we'll start there.

There are two types of bonds that are specifically crafted to help pay for education expenses, Series EE and Series I bonds, and these are federal bonds.

Sam, can you give us a brief explanation of each and why are they beneficial, any drawbacks, all of that?

So these are both non-marketable government bonds that are designed for long-term savings purposes.

Series EE bonds earn a fixed rate of interest, and the Treasury Direct website notes that at current rates, they are guaranteed to double in value in 20 years.

Now, Series I bonds are designed to protect your money from inflation.

They have a variable interest rate that changes every six months.

It's typically 1.10%

plus the current inflation rate at the time of the latest adjustment.

In both cases, there's a minimum purchase of $25 and a maximum purchase of $10,000 per calendar year.

These are both federally taxable, but exempt from state tax.

Both types of bonds can be cashed in early after a minimum of 12 months, but you forfeit the last three months of interest if you do that.

Some folks really like EE or I bonds because the interest earned on them can actually be excluded from your federal taxes if you use the bonds for qualified educational expenses, and that can be pretty sweet.

But you do have to follow some really specific rules around which educational expenses that you can use the bond money for.

Otherwise, you won't get that tax benefit.

Gonna have to consider that for my son's college fund.

But there are other bonds that folks can use to save money for expenses that come with fewer guardrails than Series EE and Series I bonds.

Can you outline another bond or two that might help our listener or other people like me looking to save for education expenses, Sam?

Regular treasury bonds are also state tax exempt and also available in long maturities like 10, 20, or 30 years.

And much like Series EE savings bonds, you'll know exactly how much you earn if you're going to hold them to maturity.

The main thing that distinguishes treasury bonds from savings bonds is that you can sell them before maturity.

There's no interest penalty for that, but if you sell a bond for a lower price than you paid for it, you won't get all your money back.

If you sell for a higher price, you'll earn a profit, but the profit will be subject to capital gains tax.

Now,

those fewer guardrails can be a blessing or a curse.

They give you more flexibility if life goes in an unexpected direction and you need money sooner.

But otherwise, you do have to kind of resist the temptation to sell early.

Our listener also has some pretty specific questions about buying bonds, namely whether there's a specific time that is better to buy them or not good to buy them, and also how to buy them.

So what should our listener know here?

Well, I'll start with the how.

You buy savings bonds at treasurydirect.gov.

You set up an account there and that lets you buy them and manage them and cash them out.

Savings bonds, again, are non-marketable, which means they don't trade and they're not sold at a discount.

So So there's really no way to time the market with savings bonds because there is no market.

The best time to buy them is whenever it makes sense for your long-term financial goals.

With treasury bonds or other types of bonds, it's different.

You can buy treasury bonds via treasury direct, but you can also buy them through brokerage accounts that offer individual bonds.

Hypothetically, you might luck out and buy a bond at an unusually steep discount, meaning a very high yield.

But generally speaking, trying to time the market is easier said than done.

At least timing it successfully.

We're going to shimmy along to the second question, which our producer Tess is going to read again.

Oh, well, here I am again.

All right, Tess.

Hi, I have a series double E savings bond that I was gifted a long time ago.

It reached maturity four years ago, but I don't know what to do with it.

I've tried Googling, but I ended up more confused.

How do savings bonds work and how do I cash in?

Thanks for your help, Valerie.

All right.

Valerie's question is pretty straightforward.

So, Sam, I know you touched on this earlier, but how do savings bonds work?

As we've mentioned, Series EE bonds earn a fixed rate of interest.

They'll double in value in 20 years at current rates.

But given that Valerie's bonds have already matured, she doesn't need to worry about forfeiting interest to early withdrawal penalties when she cashes them in.

And then how can Valerie cash them in?

So the best place to go for this information is the Treasury Direct page on how to cash out savings bonds.

They have thorough instructions, but basically it depends on whether the bonds are paper or electronic.

Nowadays, bonds are only offered electronically through treasurydirect.gov, but they used to also be available as paper bonds.

And given that she said that these bonds were gifted a long time ago, they might be that.

If it's paper, it's a matter of calling a bank she has an account with and asking if they'll cash them.

If it's electronic, she'll need to log into treasurydirect.gov and cash them there.

And are there any tax considerations that Valerie should be aware of here?

Yeah, income from savings bonds is exempt from state and local taxes, but it is federally taxable.

Treasury Direct or the bank that cashes them in the case of paper bonds will send her a 1099 int form to include with her next federal tax return.

Now, after giving us a rundown of bonds and answering these two listener questions, do you have any final thoughts you want to leave with us about bonds, Sam?

If you're interested in buying individual treasuries or municipal bonds or corporate bonds, you'll need need a brokerage account that offers individual bonds because not all of them do.

And NerdWallet's best online brokers for bonds roundup is a good place to start.

Love a good plug.

Well, thanks for coming on, Sam.

Of course.

Thanks for having me.

That's all we have for this episode.

Remember, listener, that we're here to answer your money questions.

So turn to the nerds and call or text us your questions at 901-730-6373.

That's 901-730-N-E-R-D.

You can also email us at podcast at nerdwallet.com.

And don't forget, you can anonymously submit your budget for us to potentially review on a future episode.

Just click the link in the episode description.

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And here is our brief disclaimer.

We're not your financial or investment advisors.

This nerdy information is provided for general educational and entertainment purposes, and it just might not apply to your specific circumstances.

This episode was produced by Tess Wiglund.

Hilary Georgie helped with editing.

Nick Harissimi mixed our audio.

And we want to give a big shout out to NerdWallets editors for all of their help.

And with that said, until next time, turn to the nerds.