You can lose track of the time. You can lose track of your car keys. But you'd never lose track of your investments. Or would you?
Actually, many people do just that - at least when it comes to their U.S. Savings Bonds. In fact, owners failing to redeem their Series E, H and HH bonds are losing an estimated $300 million a year in interest from matured bonds, according to the Bureau of Public Debt.
While you may not be sitting on $300 million yourself, you may well have a few savings bonds sitting around the house. These bonds have long been popular as gifts, but, over time, people misplace them - or forget about them altogether. On the other hand, some people deliberately hold onto their savings bonds, believing that they'll keep earning interest forever.
However, that's not the case. Once your bonds reach final maturity, they're not going to pay you any additional interest, no matter how long you hold them.
Even so, you might think that it's no big deal to hang onto your bonds. After all, they're issued by the Treasury, so you know that you will be able to get your money someday. And that is true, of course, because the U.S. government is the most reliable borrower in the world. As one of its bondholders, you can be sure that you'll get your money.
But that's not really the point. By holding on to your matured bonds, you're depriving yourself of the interest that's due to you. And by not taking this money, you're missing out on the opportunity to invest it elsewhere. Remember, even though your bonds are safe, they no longer earn you any interest. They now have a zero percent rate of return - and you don't have to look too hard to find investments that can probably do better.
Even if the money from your savings bonds doesn't add up to a great deal, it can still be a valuable asset. Before you invest it - in fact, before you invest any money, from any source - consider your individual needs, your risk tolerance and time horizon. Then, if you decide to keep the money in a fixed-income investment, you might want to consider an investment-grade corporate bond. While the value of this type of bond will fluctuate, it will likely earn a considerably higher rate than a savings bond. Or, if you already own some stocks, but you want to further diversify your portfolio, you might use the proceeds from your savings bond to buy a few shares in a high-quality company.
The point is to do something with the money. If you're going to achieve your long-term objectives, you'll need to maximize your resources.
So, get out those old savings bonds, bring them to your bank and cash them in. If you're not sure if your bond has stopped paying interest, visit the Bureau of Public Debt's Web site at www.savingsbonds.gov. In short, wake your bonds from their slumber - and put them to work for you.