chisue, I have not bought stocks for a while, so have some cash build-up ... and am not treating that as wisely s I could, for it's mainly in savings accts., but should be in M M funds (no load) - both of which earn highly-taxed interest. But didn't sell any stocks, voluntarily - got sold out of a couple early last year, when one, a steel co., bought by a foreign buyer, one changed so drastically that a different style of stock (unit trust) issued. I've been running about 80% in stocks, some foreign (only one tiny one U.S.-based) and equity-based mutual funds, most of them global. I plan to liquidate some of the poorer (equity mutual fund) performers among them, maybe this year. I studied the course that stockbrokers take, about 25 years ago, worked for a mutual fund broker for a year (didn't sell enough to suit them) and took the 6 courses leading to Chartered Financial Planner - unfortunately, only passed five, and system revamped, would have to start over ... at age nearing 70 at the time - I didn't think so. A major component of what I consider similar-to-bond situation in my account is a mortgage-based mutual fund, bought as deductible investment in home-purchase plan, $1,000./yr. '74 - '83, $9,000. total, that has grown to over $64,000. As I've held a number of stocks/mutual funds for a number of years, if I sell them to batten the hatches for expected recession ... when to sell ... and when to buy again?? Not easy choices. And a substantial portion of the proceeds of sale - goes to the tax people. Yes, I'll have to pay tax on that portion of the gain eventually (or, more likely, my executor will) ... but why bother doing it now? Though I have larger than usual cash component now, I'm often almost fully invested. As a personal financial advisor, I recommended having 3 - 6 mos. value of income readily available in case of emergency ... but I often haven't had it. But I have a number of mutual fund and stock certificates lodged with my bank as collateral for a fully-secured LOC, which usually sits there unused - but which I can draw on if needed in an emergency. In the meantime, the underlying equities produce their usual rate of current payout, and ongoing capital gain, sometimes more than others. Plus a credit card for immediate use, to pay account in full prior to due date from LOC loan. Trouble is - used for living exenses, interest is non-deductible. So I need another LOC, to use when I choose to borrow to invest, as interest on that type of loan is deductible. As I've written elsewhere, I feel that I can borrow to invest in quality, dividend-paying stocks at almost nil net cost: interest cost deductible, dividends taxed at low rate pay part of interest cost, I gain about 2% due to inflation. At age 80, holding about 80% in wide variety of stock-based investments, I sleep easily, every night. My ex- used to say that I could sleep, any time and any place. Good wishes for making wise choices about your investments - and life in general. ole joyful

I took EE bonds to be the same as E bonds w/r to reporting. That may be rong--see paragraph 3 below. Depends on when they were bought - see paragragh 4 below - that could be significant. Current tax programs probly don't consider the E's as they are obsolete. www.publicdebt.treas.gov Series E Series E bonds were first issued in May 1941. They played a major role in financing World War II and continued as a stable method of debt financing. Series E bonds were withdrawn from sale as of June 30, 1980. They were replaced by Series EE bonds. Series E bonds are accrual bonds which were issued at 75 percent of face amount. Series E bonds were issued in denominations of $10, $25, $50, $75, $100, $200, $500, $1,000, $10,000, and $100,000. (Note: Eligibility to buy the $10 and $100,000 Series E bonds was limited.) Interest is paid at redemption as part of the current redemption value. Series E bonds may be redeemed by many financial institutions and by Federal Reserve Banks. To find out what Series E bonds are worth, try our online Savings Bond Calculator. Series E interest is reportable for Federal income tax purposes for the year in which the Series E bonds are redeemed, reach final maturity, or are otherwise disposed of, whichever occurs earliest; alternatively, a bond owner may elect to report Series E interest as it accrues. P Series E bonds have had varying original maturity periods depending on their issue dates, ranging from 10 years for the oldest bonds to 5 years for the last ones issued. Series E bonds issued from May 1941 to November 1965 have been granted three 10-year extended maturity periods. Those issued after November 1965 have been granted two 10-year extended maturity periods. Series E bonds issued from May 1952 through November 1965 have been granted an additional extension sufficient in length to make their total interest-accruing life spans 40 years. Those issued in December 1965 and after have been granted an additional extension sufficient to make their total interest-accruing life spans 30 years. ============================== www.wwwebtax.com All of the accumulated interest on E and EE US Savings Bonds is taxable in the tax year that they mature and must be reported on your tax return. One way to avoid the tax is to trade the E or EE US Savings Bonds for HH bonds. This will continue to defer the tax and you won't need to report the tax on your tax return. Special tax rules apply for US Savings Bond Tuition Plans. Series HH US Savings Bonds cannot be purchased and are offered only in exchange for Series E and EE US Savings Bonds or Freedom Shares. They pay semi-annual interest that is taxable in the tax year received and must be reported on your tax return.

Hi Rita, and others. I receive a (non-contributory - with years-of-residence requirement) government pension - on which I pay income tax, fed. & prov. I also earned my right to receive a government pension through (deductible at the time) contributions made by my employers and me. I pay tax on that, as well. I receive a privately funded pension, to which my employers and I both contributed, which was then a deductible amount for me. Which annual payment amount is added to my taxable income. I had a retirement fund, to which I alone made deductible contributions, plus a later addition from a credit earned with a part-time employment situation, part of which I could roll into that retirement fund, and part of which I had to take out in cash - thus incur tax liability in that year. When I was 69 (earlier it was 71) I had to close my personal contributory retirement fund, and I had choices: one was to shift all or part of the retirement fund into an annuity - more about that option, which I don't like, below. Or I could roll all or part of it into a retirement income fund into which I could no longer make contributions, and from which I was required to make withdrawals for the rest of my life, initially at about 7.5% annual rate and in increasing percentages until at 20% annual rate at and after age 90. I could withdraw larger amounts if and whenever I chose. I had a choice among a fairly broad range of investment types into which I could invest that asset. If I had a spouse, at my death the total mount remaining could be transferred to a similar account in her name. If I lacked a spouse (or minor or disabled kids), the full amount remaining becomes income in the year of my death - probably taxed at a higher rate than I saved when contributing it. But ... I'm no longer around to need a pension, so ... Had I not chosen one of those two available systems, the income tax people would have said that my retirement fund was shut down at the end of the year in which I was 69 - and the full amount became income in that year. And taxed accordingly. I have a prejudice against insurance companies - if they were as concerned about the public/their clients as they claimed, how come they pushed (expensive) whole life insurance so much, for so long, saying how wonderful it was that it built up those great cash values, etc.? Trouble is - if you took the cash value, the death benefit evaporated. If you waited for the death benefit, to support your dependents ... ... the cash value disappeared. The insurance companies bet that you're going to live. You bet that you're going to die (prematurely - while you have others depending on your income for survival). They're the ones who employ the actuaries. And the sales people - who are, let's say, fairly well paid (or they don't get to stay around). Annuities are a situation where you give a manager a pot of money ... ... in exchange for a promise that they'll pay you a given amount of money, annually, until you die. Or for a guaranteed number of years, maybe including spouse, etc. - in each of which case, the amount that they're willing to pay annually shrinks. Of course. Some insurance companies have gone broke - which meant that the people who held their annuities were left holding a worthless piece of paper. Later some insurance companies went together to provide a partial remedy for such situations. Annuities may not have been a bad idea about 25 years ago, when interest rates were high (but inflation was high, then, also) but not now when interest rates have been low for a number of years. Many of us feel that, as the U.S. gov't. has such huge debt, an increasing amount of it in recent years held by foreigners, plus running a very large deficit annually, making the debt increase even more, plus are printing money ... ... that the high respect in which the U.S. Dollar has been held for generations isn't going to last much longer. Which means that, in order to entice would-be lenders to be willing to lend more to the U.S. government, they'll have to offer higher rates of interest. Consumer debt in the U.S. is huge, as well - and rising. They're buying much more from abroad, especially China, than they're selling. Which puts the U.S. Dollar in serious - and increasing - jeopardy. Not a good time to be agreeing to an annuity contract, in my opinion. Not only that. Not only that. I don't want someone else running my money - I want to run it myself. Those who do it well ... ... retire early. Have a great weekend, everyone. ole joyful

Elmer the problem banks were paying out more than they had assets to cover. Remember what happened with the savings and loan problem many years ago? That was one of the things that helped push them over the edge. I worked at several banks and although I am aware of what you just wrote people who are less knowledgeable do worry about safety and being able to quickly access their money. My investments earn currently way more than what I can earn at the three institutions that are offering these higher interest rates so I have little interest at this time other than curiosity. I will be reviewing periodically as although these do not appear to be the bait and switch rates that I have seen in the past where financial institutions paid larger than normal interest rates for a period of time then swiftly lowered them. The planning was that most would not move their deposits and the few that did would make little difference in the banks balance sheets.