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EE Bond Formula:
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The EE Bond Calculator calculates the current value of US EE savings bonds based on the purchase amount, annual interest rate, and years held. EE bonds are low-risk savings bonds issued by the US Treasury that earn interest over time.
The calculator uses the EE bond formula:
Where:
Explanation: The formula accounts for semi-annual compounding, where interest is applied twice per year, making it more accurate than simple annual compounding.
Details: Calculating the current value of EE bonds helps investors track their savings growth, plan for future financial goals, and make informed decisions about bond redemption or continued holding.
Tips: Enter the original purchase amount in USD, the annual interest rate as a decimal (e.g., 0.025 for 2.5%), and the number of years the bond has been held. All values must be positive.
Q1: What are EE savings bonds?
A: EE bonds are US government savings bonds that earn interest for up to 30 years. They are safe, low-risk investments backed by the full faith of the US government.
Q2: How often does interest compound on EE bonds?
A: Interest on EE bonds compounds semi-annually, meaning it's calculated and added to the principal twice per year.
Q3: What is the minimum holding period for EE bonds?
A: EE bonds must be held for at least one year. If redeemed within the first 5 years, you forfeit the last 3 months of interest.
Q4: Are EE bonds taxable?
A: Interest earned on EE bonds is subject to federal income tax but exempt from state and local taxes. Tax can be deferred until redemption or maturity.
Q5: What happens after 30 years?
A: EE bonds stop earning interest after 30 years. They should be redeemed at this point to avoid losing potential earnings from other investments.