Savings Bond Series I Calculator

Series I Bond Formula:

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

Issue Price (P):

USD

Inflation Rate:

decimal

Fixed Rate:

decimal

Time Since Issue (t):

years

Future Value (FV):

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1. What is the Savings Bond Series I Calculator?

The Savings Bond Series I Calculator estimates the future value of Series I savings bonds based on the composite rate formula. Series I bonds are U.S. government savings bonds that earn a combination of a fixed rate and an inflation-adjusted rate.

2. How Does the Calculator Work?

The calculator uses the Series I bond formula:

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

Where:

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

Explanation: The formula compounds interest semi-annually using a composite rate that combines both fixed and inflation components.

3. Importance of Series I Bond Calculation

Details: Accurate calculation of Series I bond values helps investors understand their potential returns, plan for inflation-protected savings, and make informed investment decisions.

4. Using the Calculator

Tips: Enter the bond's issue price in USD, the semi-annual inflation rate and fixed rate as decimals (e.g., 0.025 for 2.5%), and the time held in years. All values must be positive.

5. Frequently Asked Questions (FAQ)

Q1: What are Series I savings bonds?
A: Series I bonds are U.S. government savings bonds that offer inflation protection by combining a fixed rate with an inflation-adjusted rate.

Q2: How often do interest rates change for Series I bonds?
A: The inflation rate component changes every six months (May and November), while the fixed rate remains constant for the life of the bond.

Q3: What is the minimum investment for Series I bonds?
A: The minimum electronic purchase is $25, and the minimum paper bond purchase is $50.

Q4: Are there any restrictions on Series I bonds?
A: Yes, you must hold Series I bonds for at least one year, and if redeemed within five years, you forfeit the last three months of interest.

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