I have a question I think I know the answer to…just want to run it by people smarter than I.
I have handful of Series EE bonds reaching their 30 year maturity this year. I believe the interest rate on these bonds is locked to the date of issue…lets assume 4% or so.
I have a money market account that pays 4.5%. Does it make sense to cash these bonds in after their next interest accrual period before they reach full maturity? My wife thinks that the 4.5% yield on the money market will be more beneficial than holding these bonds to maturity at 4%…that makes sense to me, but at the same time seems a little odd - the compound interest accruals late in the life of the bond seem to be higher than what I’d get on the money market.
I forget if the above rates are effective yield or stated yield…lets assume they are effective yield and interest accrues on each on a daily average basis just to simplify the question.