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Savings-Bonds-Alert: 1/98 EE still beats Vanguard 500 Index Fund

Thursday, February 03, 2005

1/98 EE still beats Vanguard 500 Index Fund

On the home page of our site there's a graphic showing the relative performance of Series EE Savings Bonds and the popular Vanguard 500 Index fund. It's there to demonstrate that the value of stocks goes both up and down, while Savings Bonds only go up. However, these Savings Bonds are also actually out-performing the Vanguard fund! As of February 1, the 1/98 Series EE is worth $1.36 per dollar invested, while the Vanguard Fund, including both dividends and price change, is worth just $1.34. For Feburary the dividend yield of the Vanguard fund will be 1.59%, as compared to the Series EE rate of 3.25%. Based on dividends alone, Savings Bonds are clearly the better choice. Of course the other element, which Vanguard has and Savings Bond don't, is the level of prices for the 500 stocks that make up the index. Since stocks haven't done all that well in the seven year period the graph takes into account, Savings Bonds are still slightly ahead.


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