Savings Bond Calculator I Bonds

I Bond Value Formula:

\[ FV = P \times (1 + (inflation\ rate + fixed\ rate) / 2)^{2 \times t} \]

Issue Price (P):

USD

Semi-annual Inflation Rate:

decimal

Fixed Rate:

decimal

Time Since Issue:

years

Bond Value (FV):

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1. What is the I Bond Value Formula?

The I Bond value formula calculates the future value of Series I savings bonds issued by the U.S. Treasury. These bonds offer inflation protection through a combination of a fixed rate and a variable inflation rate.

2. How Does the Calculator Work?

The calculator uses the I Bond value formula:

\[ FV = P \times (1 + (inflation\ rate + fixed\ rate) / 2)^{2 \times t} \]

Where:

$ FV $ — Future value of the bond (USD)
$ P $ — Issue price of the bond (USD)
$ inflation\ rate $ — Semi-annual inflation rate (decimal)
$ fixed\ rate $ — Fixed interest rate (decimal)
$ t $ — Time since issue in years (years)

Explanation: The formula compounds interest semi-annually, combining both the fixed rate and the variable inflation rate to calculate the bond's current value.

3. Importance of I Bond Calculation

Details: Accurate I Bond valuation is essential for investors to understand the real return on their investment, track bond performance, and make informed financial decisions about holding or redeeming bonds.

4. Using the Calculator

Tips: Enter the bond's issue price in USD, the current semi-annual inflation rate as a decimal, the fixed rate as a decimal, and the time since issue in years. All values must be valid (price > 0, time > 0).

5. Frequently Asked Questions (FAQ)

Q1: How often do inflation rates change for I Bonds?
A: Inflation rates for I Bonds are adjusted every six months, in May and November, based on the Consumer Price Index for All Urban Consumers (CPI-U).

Q2: What is the minimum investment for I Bonds?
A: The minimum investment for electronic I Bonds is $25, while paper bonds purchased with tax refunds have a minimum of $50.

Q3: Are there any restrictions on redeeming I Bonds?
A: I Bonds cannot be redeemed within the first 12 months of purchase. If redeemed within the first 5 years, you forfeit the last 3 months of interest.

Q4: How are I Bonds taxed?
A: I Bond interest is exempt from state and local income taxes but subject to federal income tax. You can choose to report interest annually or defer until redemption.

Q5: Where can I find current I Bond rates?
A: Current rates are published on the TreasuryDirect website (www.treasurydirect.gov) and are updated each May and November.