1. What is the Savings Bond Calculator?

The Savings Bond Calculator calculates the total value of an inventory of US savings bonds using compound interest formula with semi-annual compounding. It helps investors track the current worth of their bond investments.

2. How Does the Calculator Work?

The calculator uses the savings bond valuation formula:

Where:

• \( V \) — Current value (USD)
• \( P \) — Purchase amount (USD)
• \( rate \) — Annual interest rate (decimal)
• \( y \) — Years held (years)

Explanation: The formula accounts for semi-annual compounding, where interest is calculated twice per year and added to the principal.

3. Importance of Savings Bond Valuation

Details: Accurate bond valuation is essential for portfolio management, financial planning, tax reporting, and understanding investment growth over time.

4. Using the Calculator

Tips: Enter purchase amount in USD, annual interest rate as a decimal (e.g., 0.05 for 5%), and years held. All values must be valid (purchase amount > 0, rate ≥ 0, years ≥ 0).

5. Frequently Asked Questions (FAQ)

Q1: What types of savings bonds does this calculator work for?
A: This calculator works for Series EE and Series I US savings bonds that use semi-annual compounding.

Q2: How does semi-annual compounding affect the final value?
A: Semi-annual compounding results in slightly higher returns than annual compounding due to more frequent interest calculations.

Q3: Are savings bond earnings taxable?
A: Yes, interest earned on savings bonds is subject to federal income tax, but exempt from state and local taxes.

Q4: What is the minimum investment for US savings bonds?
A: The minimum purchase amount for electronic savings bonds is $25 through TreasuryDirect.

Q5: Can savings bonds lose value?
A: US savings bonds are guaranteed not to lose value and have fixed interest rates that protect against market fluctuations.