The way people save money isn't what it used to be. Most seem to either contribute to a company-sponsored 401(k) plan or have a broker who advises them on stocks and mutual funds. Or they go it alone and contribute monthly to a pre-packaged portfolio online. Then, of course, there are the masses who have trouble paying the bills on time and saving money for them just seems to be an impossibility.
But regardless of your ability to save, one thing seems pretty clear and that is that nobody really considers savings bonds and savings accounts as real options anymore. It could be because the interest is typically pretty low; it could be because greed is typically pretty high; or it could be simply that these vehicles of saving money have become passe.
When I was young, my Uncle David gave me a savings bond every year for my birthday and for Christmas. This continued until I was probably 7 or 8 years old and became more and more vocal about wanting toys. I can just imagine me thinking "what good is money I can't spend until I'm 18!" Usually he gave me a $25 or $50 savings bond, but there were one or two $100 bonds mixed in with my collection. Sure enough, Uncle David was giving me the best gifts of all. I just didn't know it.
The truth is that aside from the Mickey Mouse drumset my Aunt Nancy had given me -- much to the chagrin of my mom and dad, I'm sure -- I can't sit here 25 years later and tell you what gifts I received from relatives. While I'm sure they gave me some very nice clothes and fun toys, they were of course destined to be outgrown or become broken or lost. And while at the time, I totally preferred toys to money I couldn't spend, my uncle's genorosity and thinking became a lot more evident when I was 17. All those savings bonds he had given me ended up being worth about $1700 by the time I was ready to buy a car and, lo and behold, the 9-year old Nissan Stanza I wanted cost just about that much. I'll never forget the first time I told my uncle that I used those bonds he gave me to buy my first car. His response? "Holy shit!"
Kristin gave that same response to a bank teller earlier this week. It seems that her mother had stumbled across two savings bonds given to Kristin when she was a toddler. One was for $25 and the other was for $50. Savings bonds expire after thirty years so Kristin's mom mailed them over to us so Kristin could go and cash them in before they hit their expiration date. I'm sure nobody really thought anything of them, least of all Kristin who didn't realize that if you give them enough time, those little pieces of paper end up being worth quite a bit more than their denomination.
So after spending far too long with a pimply-faced teenage bank teller who clearly hadn't ever seen a savings bond before, she finds out that they're now worth $358. That's a lot of money to have totally forgotten about! And while my initial reaction was that it still couldn't have amounted to much interest over the years, a quick minute with the calculator showed me how wrong I was. Turns out that if you assume both savings bonds were issued 29 years ago (which they weren't, one was even younger), they gained 477% in value. That breaks down to about 16.5% a year interest every year for 30 years. I'm no expert investor by any stretch, but I do know that there aren't many investments that are guaranteed and earn 16% a year for thirty straight years.
And this is where I get to demonstrate that every now and then I can be a good husband and surprise my wife with something I know she'd want, but never get for herself. When I learned that Kristin had been handed $358 for those bonds and was planning on just depositing them into the checking account and using them towards groceries and whatever, I decided that I had to spend it on her, even if she wasn't going to. Not an hour later I saw a commercial on ESPN for a Faith Hill & Tim McGraw concert coming to Seattle in August. They're calling it the Soul II Soul tour, or some such thing. While I wouldn't kick Faith Hill out of bed, I sure wouldn't pay to go listen to her sing. Country just isn't my bag. Kristin, on the other hand, loves singing along with Faith Hill in her car and thinks Faith's hubby Tim is pretty hot. You should have seen her run to the tv during half time on Monday Night Football this season so she can see Tim McGraw's weekly football music video.
Anyway, there was a problem with my plan of buying the tickets. Their were few tickets left (and they were expensive) and you had to be a member of the Faith Hill Fanclub to get in. But as luck (or greed) would have it, Faith and Ticketmaster gave you the opportunity to join her fanclub whie ordering the tickets. And in return for a small additional donation of $30, she'll send you a glossy 8x10 photo of her. So I was able to get them. Knowing that there was no way I could keep the secret for 6 months, I told her over a pizza and beer after snowboarding Wednesday night. She didn't even know about the concert yet, and that made the surprise even better.
So Kristin can go to the concert with her friend; I'll stay home with the photo.