The embattled investment house, which is charged with fraud and misleading investors in the sale of complex mortgage-based financial products, bought and sold housing investments betting the market would fall, a process known as short selling.

“Of course we didn’t dodge the mortgage mess” chief executive Lloyd Blankfein told staff in a 2007 email released by the US Senate, “we lost money, then made more than we lost because of shorts.”

Blankfein, who guided Goldman through the financial crisis and a 10-billion-dollar government bailout, will testify before a Senate panel next Tuesday, facing angry questions from lawmakers about the firm’s role in the crisis.

As Congress discusses sweeping measures to reform the financial sector and place curbs on complex investment products, Goldman Sachs has been forced under the spotlight by the allegations from the Securities and Exchange Commission.

The US watchdog accused Goldman of allowing a prominent hedge fund to help put together a package of subprime mortgages that were sold to Goldman clients, but which the fund was at the same time betting against.

Britain’s financial regulator has also launched an investigation.

The company has vigorously denied any wrongdoing and has vowed to defend its reputation as Wall Street’s most stable finance house.

The storied Wall Street investment bank recently posted first quarter earnings of 3.46 billion dollars, up a whopping 91 percent against the same three months a year ago, blowing Wall Street expectations out of the water.

Conseco reported net income of $18.2 million, or 9 cents per share, compared with a net loss of $453.3 million, or $2.45 per share, in the 2008 fourth quarter.

The 2009 quarter included $13.8 million of net realized investment losses and other items, while last year’s results included a $486.7 million in such losses.

Net operating income, or income before investment gains and losses, was $32 million, or 15 cents per share.

Analysts polled by Thomson Reuters, on average, expected a profit of 20 cents per share.

Bankers Life had pretax operating earnings of $84.6 million, more than double the $40 million of a year earlier. Net annualized premiums, or the amount of new business written, was up 28 percent at $92.8 million.

Colonial Penn’s pretax operating earnings were $5.9 million, down from $6.7 million the prior year. Net annualized premiums slid 22 percent to $8.4 million.

Conseco Insurance Group had pretax operating earnings of $6.7 million, versus $31.5 million the prior year. Net annualized premiums rose 4 percent to $18.8 million.

For the year, Conseco Inc. reported a profit of $85.7 million, or 45 cents per share, compared with a loss of $1.13 billion, or $6.13 per share, for 2008. Net operating income for the year was $164.6 million, or 86 cents per share, compared with $137 million, or 74 cents per share, in 2008.

In afternoon trading, Conseco shares slid 38 cents, or 7.2 percent, to $4.95. The stock has changed hands between 26 cents and $7.04 in the past 52 weeks.

Manufacturing output expanded in February for a seventh straight month. Factory output has provided one of the few areas of strength for the economy. Still, the growth in manufacturing activity slowed compared with January and fell short of economists’ expectations.

In addition, construction spending fell for a third straight month in January. And though personal spending rose slightly more than expected, Americans’ incomes scarcely budged. In part, that was because Social Security recipients didn’t get their usual cost-of-living boost.

The weak income growth could depress spending in the months ahead and drag on the economy’s rebound.

The Institute for Supply Management, a trade group of purchasing executives, said its manufacturing index read 56.5 last month. That was slower than the 58.4 reading in January. A reading above 50 indicates expansion.

The ISM said its employment measure grew for the fourth time in five months, accelerating to 56.1 in February from 53.3 in January. February’s number is the highest since January 2005. Gauges of production and new orders fell, indicating slower growth ahead.

Economists cautioned that manufacturers have been ramping up production for businesses that had let their stockpiles shrink to save money. If consumer spending remains tepid, manufacturing activity — and its contribution to the economy — will decline.

“The bulk of the upturn in manufacturing output is probably behind us,” said Dan Greenhaus of Miller Tabak.

Still, many manufacturers say they’re seeing hopeful trends. Chip giant Intel is predicting a rebound in demand for PCs this year. And auto makers have been raising sales estimates and recalling some workers.

Even some companies in the hard-hit small-business sector are starting to report higher sales. Small companies have struggled with tight credit and have benefited less from government stimulus programs.

In early September, John Rosmarin, president of office supplies maker Saunders Manufacturing Co., said he hoped to restore full-time hours for employees within a couple of months. That’s happening only now at the company’s factory in Readfield, Maine.

“If you had called me maybe a month ago, I wouldn’t have been this positive,” Rosmarin said.

But a slight uptick in sales led him to reinstate Friday as a work day for his employees for the past three weeks. They had been working a 32-hour workweek for the past 12 months.

Rosmarin said big chains such as Wal-Mart Stores Inc. and small independent retailers are ordering more of Saunders’ products.

Other areas of the economy are struggling. One of them is construction spending, which fell again in January, the Commerce Department said. A lag in commercial activity such as office buildings and hotels offset a housing rebound. The trouble builders are facing is likely to weigh on overall economic activity.

Overall construction spending dropped 0.6 percent. Housing construction rose 1.3 percent. But that gain could be temporary, given the weakness in sales of new and existing homes in January. Spending on nonresidential projects fell by 2.1 percent.

After the third monthly decline, construction spending in January stood at a seasonally adjusted annual rate of $884.12 billion, down 11.5 percent from a year ago.

The industry is expected to remain under pressure as home builders struggle to recover from the steepest slump in decades. Banks, with mounting loan problems in commercial real estate, have tightened lending standards.

Even with a 1.3 percent rise in private residential construction, activity in the sector still fell 6.4 percent from a year ago. Doubts about a sustained housing recovery grew after reports last week that sales of new homes plunged to a record low in January and sales of existing homes fell to their slowest pace since summer.

Commerce also reported that personal spending rose 0.5 percent in January. That was slightly better than expected. But incomes edged up only 0.1 percent — the weakest showing in four months. The income figure raised concerns about whether consumers will be able to keep spending at a strong enough pace to support an economic rebound. Consumer spending is closely watched because it accounts for 70 percent of total economic activity.

The scant rise rise in incomes came even though private wages and salaries rose $16.1 billion at an annual rate, compared with a $2.3 billion gain in December. But households did not get their usual boost from the government’s annual cost-of-living adjustment for Social Security and other benefits. The 50 million recipients of Social Security saw no gain at all in January because of low inflation.

It was the first time that’s occurred in more than three decades. In January 2009, the boost from the Social Security cost-of-living increase translated into a $41.1 billion gain in incomes at an annual rate.

For the past two years, income growth has been held back by job losses caused by the worst recession since the 1930s. For all of 2009, personal incomes actually fell by 1.7 percent, the weakest showing since the Great Depression year of 1938, when incomes had fallen 7.7 percent.

The ISM manufacturing report said that even as employers’ willingness to hire rose, current business activity slowed in February. Growth in new orders slowed to 59.5 from 65.9 in January, while production slowed to 58.4 from 66.2. New orders are a gauge of future activity.

Comments from the companies surveyed didn’t mention harsh winter weather is a factor in the slowing pace of new orders and production, said Norbert Ore, chair of ISM’s manufacturing survey committee.

A pickup in business investment in equipment and software, increases in exports and slower cutbacks of inventories have helped drive production gains.

Strong productivity gains mean there’s been only slight hiring despite the ramp-up in production. The manufacturing sector added 11,000 jobs in January, the government said — the first jobs gain since January 2007.

The Obama administration effort, known as Home Affordable Refinance Program, had been scheduled to end on June 10 but will now run out on June 30, 2011, the Federal Housing Finance Agency said Monday.

The program allows borrowers who owe up to 25 percent more than their homes are worth to refinance to lower interest rates.

It was originally projected to help 4 million to 5 million homeowners with loans owned or guaranteed by Fannie Mae and Freddie Mac. So far, it has helped around 220,000, according to the Treasury Department.

LOS ANGELES – Mary Feller’s family of three spends nearly $25,000 a year on health insurance premiums, which is more than they pay on their home’s mortgage in California’s Marin County.

“I think for the first time we’re really scared that we’re going to be without health insurance,” she said. Feller’s especially worried for her 26-year-old daughter, a cancer survivor whose premium has tripled in four years.

That’s why she decided to become a plaintiff in a lawsuit against California’s largest for-profit health insurer on behalf of policyholders who were allegedly pushed to take coverage with fewer benefits and higher deductibles.

In a lawsuit filed in Ventura Superior Court on Monday, Anthem Blue Cross is accused of violating a California law requiring health insurers to offer new, comparable coverage or minimize premium increases when they close a policy.

According to the lawsuit, plaintiffs Mary Feller and Randy Freed received similar form letters from the Woodland Hills-based insurer, stating their policies were closed and they could “switch to any Anthem Blue Cross individual health plan with no underwriting required.”

The lawsuit alleges that the few plans Anthem would allow Feller and Freed to switch into had higher premiums, higher deductibles, less coverage, or a combination of those undesirable traits.

Anthem Blue Cross spokeswoman Peggy Hinz said the insurer hasn’t yet reviewed the lawsuit, declining further comment.

The lawsuit seeks class action status and is being brought by Consumer Watchdog, a Santa Monica-based consumer advocacy group, on behalf of Feller and Freed.

When the practice was outlawed in 1993, legislative analysts called it a “death spiral” because rates inevitably increased until policyholders could no longer afford coverage. As the coverage pool shrank over time, rates went up and up.

“It’s a very profitable practice, and what we know is the insurance industry is very focused on short-term returns,” said Jerry Flanagan, a health advocate for Consumer Watchdog.

The lawsuit comes on the heels of government scrutiny of a steep Anthem Blue Cross rate hike for roughly 700,000 individual policyholders in California. The hikes average 25 percent — some premiums will rise as much as 39 percent — but implementation of the hike has been delayed until May 1 while a state regulator investigates.

Anthem executives have blamed the current economic climate, flaws in the national health care system, high costs of health care and fewer young, healthy people holding onto insurance policies for the rate hikes.

The Obama administration has called Anthem’s hike a harbinger of rising premiums in its arguments for health care reform.

In special hearings last week, California legislators and the U.S. House of Representatives questioned executives from WellPoint, Anthem’s parent company, about proposed premium hikes in California, Maine and elsewhere.

No matter how much it accomplishes — from credit rating agency upgrades to generating gobs of free cash flow — the boo-birds still find something new to chirp about.

One of the latest shots came in Friday’s Wall Street Journal, where Heard on the Street’s Martin Peers suggests that the stock is only worth $0.25.

Bulls are aghast. Shorts nod in approval. A quarter? It’s a ridiculous notion, but investors should consider where Peers is coming from with his valuation, before dismissing it entirely.

The leveraged hand of enterprise value
There’s no denying that a $0.25-price-tag on a stock that is trading four times higher is a slap in the face. But a casual investor who pulls up a quote on Sirius XM would be deceived by the market cap implied by a $0.25 a share valuation. Sirius XM closed out the year with a weighted average of 3.6 billion diluted shares outstanding, though last week’s 10-K filing has the actual number of common shares outstanding as of Feb. 23 as nearly 3.9 billion.

The $0.25 price implies a market cap just shy of $1 billion — an insanely low sticker for a company that just delivered pro forma revenue of $2.5 billion and $463 million in adjusted operating income last year (and fully expecting to improve on those sums this year).

We can’t stop there, though. The 3.9 billion outstanding shares actually represent just 60% of the company. Liberty Capital (Nasdaq: LCAPA – News) owns a 40% stake in preferred shares, propping the actual share count to 6.5 billion. Accounting rules prevent Sirius XM from including those shares on its income statement until it turns a profit, but bean counters know the shares are there.

Now a $1.6 billion market cap with Liberty Capital is still insulting. It’s less than what Google (Nasdaq: GOOG – News) paid for YouTube — before the site was even property monetized. However, we’re still not done with this valuation exercise.

Sirius XM closed out 2010 with just over $3 billion in long-term debt. There’s a little cash on the balance sheet, but accounts payable outweigh the cash and accounts receivables. Either way, the net debt is rounded off to $3 billion. At the seemingly insulting $0.25-a-share point, Sirius XM would command an enterprise value of approximately $4.6 billion.

When the consistently profitable DirecTV (NYSE: DTV – News) and DISH Network (Nasdaq: DISH – News) trade at enterprise value-to-revenue multiples of 1.7 and 1.0, respectively, the $0.25-a-share mark would put Sirius XM at premium ratio of 1.8.

Peers leans on the company’s adjusted EBITDA guidance of $550 million for 2010, suggesting that Sirius XM deserves a forward enterprise value-based multiple of 8, instead of 18, where it is now.

In other words, trading a single share for a quarter isn’t as horrendous as it may initially sound — until you realize why Peers is wrong.

Peers pressure
There are a few rudimentary things that are missing from the analysis.

For starters, Sirius XM’s leverage also treats a low share price almost as a stock option. After all, Sirius XM’s enterprise value to this year’s adjusted operating income multiple can’t dip below 6, because that would price the shares below zero.

Another thing missing from Peers’ analysis is the value of the satellite-radio giant’s net operating loss situation. Sirius XM lost $529 million last year, adding to its grand total accumulated deficit of $10.2 billion since its inception. The majority of that can be used to offset the tax liability on future profits.

In other words, it will be a long time before Sirius XM is paying material taxes on its future profits (and they’re coming — with its barely profitable fourth quarter a positive sign of things to come). Sirius XM’s losses aren’t pretty in the rearview mirror, but it represents billions in tax savings at today’s corporate tax rates.

The final point that Peers is missing is that comparing satellite radio to satellite television — or even cable broadcasters including Comcast (Nasdaq: CMCSA – News) and Cablevision (NYSE: CVC – News) — is woefully nearsighted.

We don’t know what Sirius XM’s margins will look like when it really gets cooking. Unlike the television subscription services that have to pay escalating costs for content, there is no ESPN or MTV that is has to carry. Subscribers value satellite radio’s deals with pro sporting leagues, Howard Stern, and cable heavies such as CNBC, but there is little stopping Sirius XM from controlling its programming costs by providing more proprietary content.

Premium radio will never come close to commanding the markups for premium television, but Sirius XM has far more wiggle room beyond the cost of maintaining its expensive satellites. Sirius XM offers a more open-ended future, and that is why the stock has skyrocketed over the past year — and why it’s not going to see $0.25 a share again.

Where do you think Sirius XM will be trading by the end of 2010? Extra value points will be scored if you can justify your valuation in the comments box below.

The deals are expected to come in three separate transactions with Barclays Capital acting as sole manager for the sales, market sources said.

The FDIC could not immediately be reached for comment.

Its first $1.81 billion two part transaction, is expected to price later this week. Two additional offerings, including a $1.37 billion three-part sale and a $668 million one-tranche deal, are seen pricing in the coming weeks, after investor road shows were held for all three, market sources said.

“The FDIC has all this paper that they inherited from failed banks and they need to move it. An easy way of doing it is to put it into a security and slap the full faith and credit of the government on it and people will buy it,” said Dan Castro, chief risk officer at Huxley Capital Management.

Still, while the sales move the assets off the FDIC’s books it does not move the economic risks.

“The sales move the funding of the assets from the government to the investors which is good, though potential liability of losses stays with the FDIC,” said Castro.

The asset sales, which are guaranteed by the FDIC, are closely tied to the meltdown in the U.S. mortgage market and are seen as a positive step toward restoring investor confidence in the segment.

In a move reminiscent of the Resolution Trust Corp, the government agency charged with insuring deposits and thrifts is employing securitization as a financial tool to help mop up the assets.

In the early 1990s, the federal government employed a similar method to dispose of the assets of failed banks and thrifts. During the savings and loan crisis, it created a new entity called the Resolution Trust Corporation, or RTC, whose mission was to dispose of assets, largely through securitization.

The move has been anticipated by investors and dealers for months as the FDIC piles up loans from banks failing at an alarming rate. It could also awaken a market that has been largely frozen for two years, except for government-sponsored programs of Fannie Mae and Freddie Mac.

Keet, a Little Rock restaurant owner and former state legislator, made his candidacy official by filing paperwork at the state Capitol. Keet had announced Friday that he would run against Democratic Gov. Mike Beebe.

Keet announced his run for governor after briefly considering a run for lieutenant governor. Keet said Republicans had asked him to consider running for the state’s top elected office instead.

Keet avoided directly criticizing Beebe, a Democrat who remains popular in the state and who has raised more than $1 million for his re-election bid. Instead, Keet criticized the state’s tax structure, which he says is scaring businesses away from the state.

Keet said he wants to phase out the state’s tax on capital gains, but did not offer a timeline for eliminating it. The Department of Finance and Administration estimated that eliminating the tax would decrease individual income tax collections by $98 million and decrease corporate income tax collections by $18.5 million.

Keet also proposed raising the threshold on the highest income tax bracket in the state but did not offer specifics on how he would do it.

“Our tax structure is obsolete, needs reform, and our taxes are too darn high,” Keet said at a news conference after filing.

Keet said he believed he could beat Beebe and denied he was running just to help Republicans keep their spot on the ballot. Under Arkansas law, a party must receive at least 3 percent of the vote for governor in the last election to have a guaranteed spot on the ballot.

“I’m not in this to get 4 percent,” Keet told reporters. “I’m in this race to win.”

Earlier Tuesday, Beebe said he believed his administration had done a good job in making the state attractive to businesses. Beebe ran on a promise to phase out the state’s sales taxes on groceries, which has been cut from 6 percent to 2 percent since he took office in 2007.

“We’ve done a pretty good job, compared to the rest of the country, in attracting business in the last couple of years,” Beebe said. “You always look at ways to improve things, but you’ve got to balance all of that with the ability to meet your obligations.”

Tuesday marked the second day of the one-week filing period for state and federal office in Arkansas.

The Arkansas secretary of state’s office said that 209 candidates had filed for office by the end of the day Tuesday.

Also filing Tuesday was former state Sen. Tim Wooldridge, who is seeking the Democratic nomination for the 1st Congressional District. Democratic Rep. Marion Berry announced in January he was retiring and would not seek re-election to the post.

Former Berry Chief of Staff Chad Causey and Mountain Home physician Terry Green filed on Monday to run for the Democratic nomination for the seat. Rick Crawford of Jonesboro is the only Republican who has filed so far.

In doing so, kaChing’s founders made the rather bold claim that they had unveiled a “new way to invest.” Equipped with this slogan, kaChing kicked off its attempts to lure investors away from funds and to its website, where users can monitor and even copy the portfolios of a select group of experts.

Several years ago, a venture capital company trying to take on the fund industry might have been ridiculed for tilting at windmills. But in an era in which the Internet is steadily uprooting traditional business models, David-versus-Goliath stories like kaChing’s are becoming increasingly common. Meanwhile, as they angle to keep their advantage over the crop of newcomers, the traditional players have responded with advances of their own. Here’s a look at some technologies that have emerged in this climate:

KaChing. There’s not a whole lot that kaChing CEO Andy Rachleff likes about the mutual fund industry. But more than anything else, he faults fund companies for failing to promote transparency. His solution: a social networking site that serves as an alternative to mutual funds. To that end, kaChing invites self-proclaimed investing experts to create online profiles in which they publicly disclose information about their strategies and justify their trading patterns. KaChing, which is registered with the Securities and Exchange Commission as an investment adviser, then evaluates the would-be experts and dubs the best ones “geniuses.”

As a kaChing user, you can question these “geniuses” free of charge. If you like what you hear, you can pay to mirror the portfolio of whichever expert you choose. When that particular investor makes a trade, kaChing will automatically make the same one for you. Since you can have either more or less invested in your kaChing portfolio than the investor you are tracking, the mirroring is done on a prorated basis. Of the management and trading fees kaChing collects from you (the average expense ratio on the site is about 1.4 percent), 75 percent goes to the expert you are copying.

MarketRiders. When is it appropriate to rebalance a portfolio? This question, a close companion of the ever popular “How high is too high?” dilemma, has plagued investors for years, largely because there is no right answer. But if you’re open to suggestions, the company MarketRiders wants to send them directly to your inbox.

For $100 per year, users can build ETF portfolios on the site and receive E-mail alerts when MarketRiders’ software signals that it’s time to rebalance. Under normal market conditions, the software will call for rebalancing about four times each year.

To some, this could seem excessive. “How often investors should rebalance is actually one of the great debates in the industry and in academic circles,” says Scott Burns, Morningstar’s director of ETF analysis. “There’s one argument that says if you rebalance too frequently, you end up missing momentum.” If you subscribe to that theory, you can change the site’s default settings so that you get fewer rebalancing alerts.

StockTwits. Now that people seem to update their Twitter accounts every time they sneeze, this site has stepped in to give investors the chance to say–in 140 characters or fewer–what’s on their minds.

On the site, which works exactly like Twitter, investors can tweet about what they are buying, stories they are reading, and anything in between. In the process, professional traders can maintain a sense of community even as the rise of online investing causes them to abandon physical trading rooms. The site is also a “learning room” for relative newcomers who are interested in monitoring and contributing to StockTwits’ electronic marketplace of investing ideas, says CEO Howard Lindzon. Since posts are very brief, the site is particularly useful for investors who don’t have a lot of time on their hands.

Covestor Investment Management. This service has a lot in common with kaChing. On CVIM’s site, you can browse through model investors’ portfolios, and if you find one you like, you can set up an account. Afterward, whenever the model investor makes a trade, CVIM will make the same one for you. In return, you pay a management fee, which CVIM shares with the investor you are tracking.

Though kaChing and CVIM appear to be very similar, there are some telling differences. As the Internet continues to empower the common consumer, the new dynamics have raised a number of troubling questions. Perhaps the stickiest of them is: What checks should be placed on the democratization of investing? As investors seize control of their portfolios away from traditional money managers, to what extent should the guardians of the new Internet models protect their clients from themselves?

KaChing has taken a bit of a conservative stance–the site allows clients to automatically mirror the trades only of those investors whom it labels “geniuses.” CVIM, on the other hand, has come down on the side of expanding its clients’ choices. “Ultimately, there isn’t one best [strategy],” says CVIM President Perry Blacher. “There isn’t one top investor.” With that in mind, CVIM, for the most part, only requires transparency and a proven track record from investors who want to post their portfolios on the company’s site. CVIM’s clients can then put money in any of the portfolios they choose.

Vanguard’s iPhone app. Apple prides itself on the claim that its iPhones have “an app for just about anything.” With a relatively new application from Vanguard, consumers can now add mutual funds to the list. The free app, which was introduced last year, made Vanguard the first mutual fund company to get real estate on iPhones.

Users who download the application can access their Vanguard accounts, view their recent transactions, read market news, listen to podcasts, and watch videos. This packaging of information hardly changes industry dynamics, but it certainly makes mutual fund investing more convenient and helps Vanguard keep pace as upstarts look to lure away fund companies’ clients.

Automatic enrollment in retirement accounts. When left to their own devices, many employees don’t sign up for their company’s 401(k) plan. To get more workers to save for retirement, many large companies now automatically enroll their workers in 401(k) plans, unless the worker takes the initiative to opt out. A new rule makes it easier for small businesses to automatically sign up their employees for a 401(k) and increase the amount they save each year as well. “When [employers] put automatic enrollment in a new plan, you typically have to get approval from the IRS,” says Lenny Sanicola of WorldatWork, a human-resources association.

The IRS recently streamlined the automatic enrollment process to make it simpler for small businesses to implement. Companies without 401(k) plans may automatically enroll workers in a SIMPLE-IRA. However, they must give employees at least 30 days’ notice specifying what percentage of their salary will be withheld from each paycheck and how that money will be invested. At least once a year, those who aren’t happy with the automatic enrollment stipulations may opt out of the plan, save a different amount, or choose different investments.

Investing unused sick and vacation days. About one third of employed U.S. adults do not take all of the vacation days they are allotted each year, according to a 2009 Expedia and Harris interactive survey. Workers who are compensated for unused sick and vacation time may now be able to transfer that money to their 401(k). “This could be an effective way of increasing retirement savings when people need to do just that,” says Steven Kronheim, vice president and associate general counsel for TIAA-CREF. “Those payouts when people do decide to retire can be very significant.” But uptake has been slow. Representatives from Fidelity, T. Rowe Price, and Vanguard–the three biggest 401(k) administrators–say that few, if any, of their clients have begun shuttling unused leave time into 401(k)’s. “The paid-time-off deferral might be a nice feature to add to a plan and offer to employees, but in this type of limited budget environment, it’s probably a little farther down the priority list,” says David Phillips, a 401(k) consultant in Towers Watson’s Minneapolis office. Perhaps workers don’t want to convert their time off into retirement savings because they get so little of it. Employees in the United States typically receive just 15 vacation days a year, compared with an average of 40 or more paid days off in Finland, Brazil, and France, according to a Mercer analysis. Many companies also offer cash for unused days off only when employment is terminated–a time when that windfall may be needed.

Bonding with your tax refund. Workers can already have all or a portion of their tax refund directly deposited into an IRA. Beginning this year, taxpayers can also use their refunds to purchase Series I Savings Bonds by checking a box on their tax return. A pilot study found that the savings bond offering at tax time got many people who were saving nothing for the future to save something: The majority of the savings bond buyers (65 percent) had $5,000 or less in total financial assets. Series I Savings Bonds pay a monthly fixed rate of return plus an inflation rate semiannually based on changes in the consumer price index. The interest is exempt from state and local income tax, but it’s subject to federal income tax, which can be deferred until the bond is redeemed. “They’re kind of the very definition of safe,” says Timothy Flacke, executive director of the Doorways to Dreams Fund. “They can be replaced if they are lost or stolen, they can’t lose value, and they are inflation protected.” Savings bonds, which accrue interest for up to 30 years, generally cannot be redeemed during the first 12 months after purchase, and three months’ interest is forfeited if they are redeemed during the first five years. The ability to add co-owners such as children to the bond will become available next year.