hello everyone and thanks for tuning
into the financial investor channel my
name is Brent today we're going to be
doing a comparison between the EE bonds
and the AI bonds what is best for you
why you should invest in either an EE
bond or an AI bond I do have a breakdown
in a chart of why you should do either
of the two now this is mainly up to you
guys so I'm going to just be putting out
the information I think this is an
important video to understand and listen
to because you know there are
differences between the bonds and
depending on the the the timeframe that
you're wanting your money invested both
of them are good investments you just
have to decide on which one it is so as
we know the yvonne's and I bonds are
both lending type of investments meaning
that whoever you lend your money to
they're essentially borrowing your money
in exchange for a savings bond that is
either issued by corporation or a
government the most common types of
savings bonds are government issued
savings bonds and you can buy savings
bonds by going to Treasury Directgov and
the link will be in the description
below now today we're going to be doing
a comparison between AE bonds and I
bonds so if you do watch the videos on a
yvonne's or AI bonds I cover both of
them pretty undeath going over their
pages today we're going to be doing a
comparison and then what a couple of
what the e bonds and I bonds don't
really compare with each other with so
they are both they can be both people
they are both electronic let's start off
by saying that paper EE bonds are no
longer available but I bonds now are
still electronic through the website all
website purchase bonds are electronic
but you can still purchase I bonds paper
through your irs refund at the end of
the year so that's the main thing learn
how they're different they also have
different interest rates issued the EE
bonds currently have a fixed rate of 0.1
zero so the differences between the EE
bond and the AI bond as far as interest
rate is they do have differ
interest rates the AE bond has a fixed
interest rate no matter what time of the
year recession or growth period you know
they always have a fixed rate for those
30 years the AI bonds they have a fixed
rate but then they also get an inflation
rate so the current fixed rate of the EE
bond is point one zero the current fixed
rate of the AI bond is zero percent
but the inflation makes it 1.96 percent
because the inflation rate how are these
bonds the same both of them can be
purchased for face value but EE bonds
can be purchased at half the face value
available the both form all electronic
bonds they can be bought for $25 or more
to the penny so you as example you can
buy an EE bond or an eye bond for 50
dollars and 23 cents the most you can
buy per calendar year for each secure
social security number is $10,000
meaning that if your husband and you
know your spouse husband and spouse
where to purchase a savings bond for a
child they would have to have a social
security number to have that bond
underneath their name but that specific
social security number could only have a
$10,000 per year so I think this is a
really good idea savings bonds are
really good for a long term
EE bonds especially so especially if you
have a child who is currently one you
have a social security number you buy a
$10,000 Cee savings bond you're
guaranteed to double in 20 years so you
buy that when they're won by the age of
21 they that night they now have a
$20,000 EE bond that they can use for
their first two year of higher education
you buy second $10,000 EE bond when
they're two and now when they're the age
of 22 now they have another $22,000 EE
bond that you know doubled now they have
a total of $40,000 that they can use
towards their higher education which is
the equivalent of what a bachelor's
degree this though in this generation
you can use it for that sort of things
aye-aye bonds on the other hand they
don't double after 20 years and we're
gonna showcase that in the graph coming
up both of them can be redeemed after
twenty twelve months and no less than
that both of them have an interest that
is earned monthly and compound
semi-annually so the interest is earned
monthly but it doesn't compound and tell
us semi-annually and it does earn
interest up to 30 years you can hear if
you cash it before five years you do
lose the last three months of interest
and they are both taxed at the federal
level but none of the state and of
course we've talked about the tax
benefits and how the money can be used
for higher education you you can get
excluded from having to pay taxes on
your interest off the bond so if you
bought it for $10,000 you cash it out as
soon as you hit a 20 year mark when it's
twenty thousand dollars you would only
pay taxes on the ten thousand dollars
that you made but if you use that ten
thousand dollars on higher education
then you could get it
tax-free and you can just keep the ten
thousand dollars that you initially
invest it into it so that's a good
breakdown of comparing EE bonds to AI
bonds now we're gonna go ahead and I
have an example here if some of the
bonds that I currently have and you can
see that the majority of them
ee bonds we're gonna see that throughout
time this is 2014 here you can see the
block here this shows that the next
external is in 2014 this is 2015 so the
I the EE bonds here during the period of
19 the 90s they had interest rates of 4%
and you can see that throughout the 2015
there's still 4% 2016 there's still 4%
2017 there's still four percent so no
matter what you purchased the EE bonds
app they are still four percent now
these ones the EE bonds that I purchased
for $1000 face value I only paid five
hundred dollars up front they're
currently getting interest of one to
three percent meaning that some of these
may not hit their face value in the next
ten years so some of them I bought in
2008 we're in the year 2017 now so
they're about 10 years they're not
halfway there so if I wait ten more
years on these EE bonds they're
guaranteed to be a face value of 1000
now I do have about two four six eight
ten twelve fourteen sixteen one thousand
dollar bonds so that'll be 18 thousand
dollars half of that is eight thousand
so I only paid $8,000 I'm going to be
getting eight thousand dollars for my
initial investment of eight thousand
dollars within a twenty year mark now
that ain't may or may not be good these
were all purchased at a time when I
didn't really need the funds so I just
sort of purchase them I did switched i
bonds these do have a little bit of a
higher return you can see but they
aren't guaranteed to double in
20 years and you can see that there's
you know the thing with I bonds you can
see right here this was bought for
$1,000 in the year 2008 it did not earn
any interest I bought it for $1,000 it
had previously made an interest of a
hundred and fifty five dollars previous
to that so this was the year 2014 so it
took six years to earn a hundred and
fifty five dollars but in the year 2008
when the recession happened it didn't
earn any interest that is because if we
go back to here we can see that the
interest rates for May 2008 was 0% for
the fixed rate and the inflation rate
that year was also 0% so I earn 0% fixed
rate and zero percent inflation rate so
that that's some reasons you may not
always want to go for the i bonds oh you
know the e bonds are guaranteed to
double in 20 years so you want to make
sure you're picking the right ones some
other things to take a look at that in
the year the AI bonds are the other ones
that we're going to be looking at here
and the AI bonds they do change per year
so this is calendar year 14 there are
two point five nine calendar year 15
they're three point and two point
calendar year 16 they went down a little
bit you can see they're now they're in
the one two percent range and now 2017
calendar year inflation is high this
year it's like two point six five
percent someone run there you can see
that the interest rate on some of these
is over four percent meaning that
they're trying to battle the current
inflation night these ones are really
good at battle the inflation I mean I'm
getting a four point one percent back on
a thousand dollars which you know right
now it's about four hundred three
hundred dollars back
in ten years which isn't great but it's
something right these are not guaranteed
to double after ten years so a good
example there now let's go ahead and get
into our graph now this is the main
important part that I want to show you
guys is the difference between EE
blondes and I bombs now I created this
little chart what $10,000 is your start
amount and this is just your interest
and this is actually a very on point
scale
so I can take the ski bond here as an
example and it was issue price 500 with
1.4 so 1.4% issued a $500 and we can see
here that this one okay this is the year
2017 so we're looking for 2017 that was
purchased in 2010 so seven years we can
go here to the seventh year and it
should be worth five hundred and fifty
nine dollars and four cents by the end
of the year the semi-annual amount so
555 and 559 so it should be right now
555 to 559 so I go over here whoops
where is it 559 right here 555 and 559
so I go back to my chart here 555
whereas the was in Avon or era here 555
and 559 so right at 5:52 so this one
doesn't actually hit its it just hit its
what 500 in 2007-2008 have been at
seventh year so it would have actually
just started at seventh year in 2017 in
may may 2017 so right here the beginning
of 2000 seventh here it would be 551
which is what it's that basically 552 so
you can see that this chart is pretty
spot-on it is correct so let's go ahead
and continue with our demonstration here
so let's go ahead and bump this up back
to ten thousand dollars with our
interest of point one zero that we're
currently getting point zero zero one
and of course is the percentage there we
go so after thirty years your initial
investment of $10,000 in an EE bond will
be ten thousand three hundred and
fourteen dollars but wait after twenty
years it's guaranteed to double to the
face value so we paid we paid $10,000
but the face value of the bond is twenty
thousand dollars so now at the twenty
thousand dollar mark it is now worth
twenty thousand dollars at the 20-year
mark and by the end of the thirty years
it is now worth twenty thousand dollars
two hundred and twenty one so that's
very good
now over here the current interest rate
is 1.96 for ten thousand dollars by the
10-year mark you will have made more
than your 10-year mark for the EE bond
you have made about two thousand dollars
more so if you are going for short-term
investments I bonds would be the way for
you but if you're going for long-term
investments EE bonds would be the best
for you
if you're looking at something over 20
years ie bonds are the way to go if
you're looking for something between 1
to 15 years I bonds would be the one way
to go but if you hit 15 years with an
eye bond you should have went with an e
bond a Yvonne EE bond and just went 20
years because you would have doubled
your investment so again you start with
$10,000 after 30 years your $10,000
investment at 1.96 the 14 thousand seven
hundred and seventy one dollars so the
difference here is five thousand four
hundred and fifty dollars that's a big
difference but this interest changes
remember we had the inflation in our in
our savings bonds so I actually have you
know 2014 2015 2016 2017 I have interest
rates that have fluctuated it's what we
can do is we take the average of these
years and we'll just start with this
first one right here let's go ahead and
actually grab the third one I'm going to
use the third one as an example so two
point five nine plus third one is three
point two five three point two five plus
two point nine five two point nine five
plus four point one eight four point one
eight divided by four gives me an
average of 3.2 inflation so 3.2 percent
is our new interest rate that is the
average and average interest rate with
inflation
so now after 30 years $10,000 with the
average of inflation added in gets as
$18,000 eight hundred and sixty eighteen
thousand eight hundred and sixty eight
dollars in ninety eight cents that has a
difference of one thousand three hundred
and fifty-two dollars now the difference
isn't two you know it's a thousand
dollars it's about a thousand dollars
off but you could have easily cashed out
your AE bond at the 20 year mark where
it was worth twenty thousand dollars
whereas your I bond is worth about
$16,000 that would have been a four
thousand dollar difference right there
now the inflation it's not always
guaranteed to move with this average but
you're a Yvonne is guaranteed to double
to its face value after 20-year mark so
it's really up to you what you think is
the best investment to be made for you
in your long term investments I think
that's a good question for you guys to
kind of figure out if this is something
you guys are interested in I think it
was a good video to kind of put out I
think savings bonds are kind of
overlooked sometimes and they're not
really invested and you can see that I
am invested in AE bonds and Islands and
I plan to go long-term and hold these
out because you can see that the
interest rate in 2014 was 45 2015 49
2016 57 2017 62 so I'm gaining a pretty
nice
floo there you know between 15 and 16 I
had nearly $1000 I'm trying to probably
had the same thing by the end of 17 and
it's just gonna continue to increase and
compound in the years to come so that is
it for this video I hope you liked it
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