Monday, Jan. 09, 1984
Savings Bond Bounceback
When children reached into Christmas stockings and ripped open presents last week, thousands of youngsters probably found a thin, crisp gift that represented an investment in their future: a U.S. savings bond. After a four-year slide in popularity, Uncle Sam's bonds are staging a comeback. The Treasury Department reports that sales of the notes totaled $3.9 billion during the past twelve months, up 20% from the previous year.
The surge stems from the Government's decision in November 1982 to offer variable rates of interest on savings bonds. When bond sales slumped in the early 1980s, they carried fixed interest rates as low as 7% at a time when inflation was nearly twice that level. Now the interest on the bonds is adjusted every six months to reflect market rates. The new bonds, which pay 85% of the average return on five-year Treasury securities, currently offer interest of 9.38%. Says Treasury Secretary Donald Regan: "The product is well designed and competitive."
Last year's peppier bond sales still ran far below the $7.8 billion pace of 1978. Nonetheless, Treasury officials are convinced that the savings bond is on its way back to being a blue-chip investment and a superb stocking stuffer.