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Savings Bond Formula:
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The Savings Bond Value Calculator determines the current value of a savings bond based on the purchase amount, annual interest rate, and number of years held. It uses compound interest calculation with semi-annual compounding.
The calculator uses the savings bond formula:
Where:
Explanation: The formula calculates compound interest with semi-annual compounding, where the annual rate is divided by 2 and compounded twice per year.
Details: Accurate savings bond valuation helps investors understand the growth of their investments over time, plan for future financial goals, and make informed decisions about bond redemption or continued holding.
Tips: Enter the original purchase amount in USD, annual interest rate as a decimal (e.g., 0.05 for 5%), and the number of years the bond has been held. All values must be positive numbers.
Q1: What types of savings bonds does this calculator work for?
A: This calculator works for savings bonds that use semi-annual compounding, such as Series EE and Series I savings bonds in the United States.
Q2: Why is the interest rate divided by 2 in the formula?
A: The rate is divided by 2 because the interest compounds semi-annually (twice per year), so each compounding period uses half the annual rate.
Q3: Can I use this calculator for partial years?
A: Yes, you can enter decimal values for years (e.g., 5.5 years for 5 years and 6 months).
Q4: Are there any taxes on savings bond earnings?
A: Yes, interest earned on savings bonds is subject to federal income tax, but may be exempt from state and local taxes. Tax is typically due when the bond is redeemed or matures.
Q5: What's the difference between Series EE and Series I bonds?
A: Series EE bonds have fixed rates, while Series I bonds have composite rates combining fixed and inflation-adjusted components. This calculator uses fixed rates.