AKAMAI MONEY
Paperless bonds may make tracking investments easier
By Deborah Adamson
Advertiser Staff Writer
Q: I heard that savings bonds will now be electronic. I'm not computer literate and I'd like to know how I can buy and redeem bonds if I don't use a computer. What is the redemption process? How quickly can you get your cash? I'm also concerned about the security of my personal information. — Boyde Sakamoto, Kahalu'u retiree
A: The U.S. Treasury Department began offering paperless bonds in October 2002 when its Internet-based service, TreasuryDirect, went online.
The federal government's goal is to modernize the savings bond program by shifting it from a system based on paper certificates to one that uses accounts accessed through the Internet.
Because moving to a paperless system can take a while, the government will still issue paper bonds for the foreseeable future.
Shifting to a paperless system would save the government a "considerable" amount of money, said Steve Meyerhardt, a spokesman for the Bureau of the Public Debt, U.S. Treasury Department.
Last year, the government sold 38 million paper securities — all of which were mailed to investors.
"While we've indicated our eventual goal is to eliminate paper savings bonds, that has not happened yet," Meyerhardt said. "There's been no date set."
That's because moving 55 million holders of bonds to an Internet-based system takes time. Since the launch of TreasuryDirect, about 200,000 accounts have been opened. Currently, new accounts are opening at the rate of 2,500 to 5,000 a week, Meyerhardt said.
"There's a big gap" between the number of savings bond holders and number of accounts opened, he said. "Until the gap closes, we're going to keep issuing paper savings bonds."
In the meantime, managing your savings bonds without a computer takes extra work. You should keep a record of the savings bonds you own, issue dates, series and denomination.
To find out the value of your bond, ask your bank to figure it out for you. You also can order a free pamphlet that prints values of EE and I savings bonds every six months. For Hawai'i investors, contact the Federal Reserve Bank in Minneapolis at (800) 553-2663.
If you want to try going online, there's a helper at www.TreasuryDirect.gov/rs/tdtour/default.htm that will guide you step by step in opening an account. Once your TreasuryDirect account is open, you can buy and redeem savings bonds through a linked checking or savings account. Money will be taken out of or deposited into your bank account when you purchase or redeem a bond.
In a redemption, money will be deposited into your bank account by the next business day.
Transactions are protected to keep them secure online, Meyerhardt said. Investors also need a password and online ID for access. Storing bonds electronically is safer than getting them by mail, where they can be lost or stolen. However, missing bonds can be replaced.
Keeping track of your savings bonds is also easier online. Your TreasuryDirect account keeps track of the value of your bonds. There's also a calculator on the Web site, www.TreasuryDirect.gov/indiv/planning/planning.htm, that will give you the value of your bonds at any given time.
However, if you are giving away a savings bond, a paper certificate is easier to gift than an electronic one, Meyerhardt said.
To give away an electronic bond, you have to set up a sub-account linked to yours on TreasuryDirect for the recipient — say, your grandson. But he cannot access the account until he's 18.
If you change your mind about the gift, you can't take back the money because it's his.
Got a personal finance or consumer question? Contact Deborah Adamson at dadamson@honoluluadvertiser.com or 525-8088.
