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United States Savings Bond Formula:
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The United States Savings Bond Calculator calculates the current value of savings bonds based on the purchase amount, annual interest rate, and number of years held. It uses the compound interest formula with semi-annual compounding, which is standard for US savings bonds.
The calculator uses the savings bond formula:
Where:
Explanation: The formula accounts for semi-annual compounding, where interest is calculated twice per year. This is the standard compounding method for US savings bonds.
Details: Calculating the current value of savings bonds helps investors understand their investment growth, plan for future financial needs, and make informed decisions about holding or redeeming bonds.
Tips: Enter the original purchase amount in USD, the annual interest rate as a decimal (e.g., 0.05 for 5%), and the number of years the bond has been held. All values must be positive numbers.
Q1: What types of US savings bonds use this formula?
A: This formula applies to Series EE and Series I savings bonds, which both use semi-annual compounding for interest calculation.
Q2: How often is interest compounded on savings bonds?
A: US savings bonds compound interest semi-annually, meaning interest is calculated and added to the principal twice per year.
Q3: What is the minimum investment for US savings bonds?
A: The minimum purchase amount for electronic savings bonds is $25, while paper bonds have a minimum of $50.
Q4: How long do savings bonds earn interest?
A: Most US savings bonds earn interest for 30 years from the issue date, after which they stop earning interest.
Q5: Are savings bonds taxable?
A: Interest earned on savings bonds is subject to federal income tax but exempt from state and local income taxes.