Savings Bond Calculator Series I

Series I Savings Bond 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:

decimal

Semiannual Inflation Rate:

decimal

Years Held (y):

years

Current Value (V):

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1. What is the Series I Savings Bond Calculator?

The Series I Savings Bond Calculator calculates the current value of US Series I savings bonds, which are inflation-protected government bonds that combine a fixed interest rate with a semiannual inflation rate to determine total return.

2. How Does the Calculator Work?

The calculator uses the Series I bond valuation formula:

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

Where:

$ V $ — Current value of the bond (USD)
$ P $ — Purchase amount (USD)
$ fixed $ — Fixed annual interest rate (decimal)
$ inflation $ — Semiannual inflation rate (decimal)
$ y $ — Number of years held

Explanation: The formula accounts for both the fixed rate component and the inflation adjustment, compounded semiannually over the holding period.

3. Importance of Series I Bond Valuation

Details: Accurate valuation of Series I bonds helps investors understand their inflation-protected returns, plan for future expenses, and make informed investment decisions about government securities.

4. Using the Calculator

Tips: Enter the purchase amount in USD, fixed annual rate as a decimal (e.g., 0.025 for 2.5%), semiannual inflation rate as a decimal, and years held. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What are Series I savings bonds?
A: Series I bonds are US government savings bonds that offer inflation protection through a combination of fixed and variable interest rates.

Q2: How often are inflation rates adjusted?
A: Inflation rates for Series I bonds are adjusted every six months based on the Consumer Price Index for All Urban Consumers (CPI-U).

Q3: What is the minimum holding period?
A: Series I bonds must be held for at least one year, and there's a penalty of three months' interest if redeemed before five years.

Q4: Are there purchase limits?
A: Yes, the annual purchase limit for electronic Series I bonds is $10,000 per Social Security number.

Q5: Are Series I bonds taxable?
A: Interest earned is subject to federal income tax but exempt from state and local income taxes.