You know, I agree with what everybody says about savings bonds not being the best investment.

BUT, I would rather grandparents, aunts, uncles, whomever, buy them bonds instead of silly toys year after year. They will remember that more in the long run than a toy they got when they were 2. So, I don't discourage it and, in fact, welcome it! I leave a note with each bond (we don't have that many really) telling the child who gave it to them and the circumstance. It was sort of hard for me to cash my grandmother's in because she gave it to me when I was 1 and when I was 30 (a year before I cashed it) she died. She truly loved me.

My husband's grandmother gave us a BUNCH of bonds that are in his and her name. Do I think that is the best investment? NO WAY! But, it was her way of giving something to my husband and, at the time, his future family (we hadn't even met yet - she gave them to us as a wedding present). Out of respect to her, we will not redeem them until she is gone. She may never know, but it somehow seems right to us.

So, don't go out and buy them, but keep them for your kids if they are given as presents. It means a lot to the giver sometimes. You have to remember the mentality of those that invest a lot in savings bonds. They were really big in the 40's and 50's so if your parents or grandparens are from that generation, they think they are great.

Think of it as found money in 30 years.

Seriously, I purchase US Savings Bonds all the time and love them. They are not my only investment vehicle but they are wonderful for the guaranteed rate of return and the locked-in feature. It isn't an investment that is easily liquidated which has some advantages.

Additionally, the US Savings Bonds of today aren't the same program from 20 years ago. The interest rate fluctuates now and you can roll EE bonds into more substantial US Treasury investments. There are also tax advantages at the time of redemption which a teenager might not appreciate when liquidating their bonds. I think they are a great way to encourage long term savings.

If you're still not thrilled with US Savings Bonds, you can ask grandma and grandpa to make a deposit in your little one's ShareBuilder account (there is a website) which would go toward a more agressive stock fund. It is very easy to open a custodial account for a child - or an account for yourself.