1. What is Series I Savings Bond?

Series I Savings Bonds are U.S. government savings bonds that earn interest based on both a fixed rate and an inflation rate. They are designed to protect investors from inflation while providing a guaranteed return.

2. How Does the Calculator Work?

The calculator uses the Series I bond valuation formula:

Where:

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

Explanation: The formula accounts for compounding interest with both fixed and inflation components, calculated semiannually.

3. Importance of Bond Valuation

Details: Accurate bond valuation helps investors understand the current worth of their investments, plan for future financial goals, and make informed decisions about holding or redeeming bonds.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: What are the current Series I bond rates?
A: Rates are announced every May and November. Check TreasuryDirect.gov for current rates.

Q2: What is the minimum holding period?
A: Series I bonds must be held for at least 1 year. Redeeming within 5 years forfeits the last 3 months of interest.

Q3: Are there purchase limits?
A: Yes, individuals can purchase up to $10,000 in electronic bonds and $5,000 in paper bonds per calendar year.

Q4: How is the inflation rate determined?
A: The inflation rate is based on the Consumer Price Index for All Urban Consumers (CPI-U).

Q5: Are Series I bonds taxable?
A: Interest is subject to federal income tax but exempt from state and local taxes. Tax can be deferred until redemption.