I Bond Growth Calculator

I Bond Growth Formula:

\[ V = P \times \left(1 + \frac{fixed + 2 \times inflation + fixed \times inflation}{2}\right)^{2 \times y} \]

Purchase Amount (P):

USD

Fixed Annual Rate (fixed):

decimal

Semiannual Inflation Rate (inflation):

decimal

Years Held (y):

years

Current Value (V):

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1. What is the I Bond Growth Formula?

The I Bond Growth Formula calculates the current value of Series I savings bonds based on the purchase amount, fixed annual rate, semiannual inflation rate, and years held. I Bonds are U.S. Treasury savings bonds that earn both a fixed rate and an inflation-adjusted rate.

2. How Does the Calculator Work?

The calculator uses the I Bond growth formula:

\[ V = P \times \left(1 + \frac{fixed + 2 \times inflation + fixed \times inflation}{2}\right)^{2 \times y} \]

Where:

\( V \) — Current value (USD)
\( P \) — Purchase amount (USD)
\( fixed \) — Fixed annual rate (decimal)
\( inflation \) — Semiannual inflation rate (decimal)
\( y \) — Years held (years)

Explanation: The formula combines the fixed rate with twice the semiannual inflation rate plus their product, divides by 2 for semiannual compounding, and raises to the power of twice the number of years for biannual compounding.

3. Importance of I Bond Growth Calculation

Details: Accurate I Bond value calculation helps investors understand the growth of their inflation-protected investments and make informed decisions about holding or redeeming bonds.

4. Using the Calculator

Tips: Enter purchase amount in USD, fixed annual rate and inflation rate as decimals (e.g., 0.05 for 5%), and years held. All values must be non-negative.

5. Frequently Asked Questions (FAQ)

Q1: What are I Bonds?
A: I Bonds are U.S. government savings bonds that protect against inflation by combining a fixed rate with an inflation-adjusted rate.

Q2: How often do I Bonds compound?
A: I Bonds compound semiannually, which is why the formula uses twice the number of years for the exponent.

Q3: Where can I find current I Bond rates?
A: Current rates are published by the U.S. Treasury Department on their TreasuryDirect website.

Q4: Are there any restrictions on I Bonds?
A: Yes, I Bonds have minimum holding periods (1 year), early redemption penalties (3 months interest if redeemed before 5 years), and annual purchase limits.

Q5: How accurate is this calculator?
A: This calculator provides a close approximation. Actual I Bond values may vary slightly due to specific Treasury calculation methods and rounding rules.