![]() For $25 bond, it becomes $25.89, which is used to calculate the values for month-7 to month-12 along with the new rate 9.62%.įor example, after month-7, $25 bond becomes $25.89 * (1 + 9.62%/2) ^ (1/6) = $26.09. So for 7th month, the base becomes $10,356 (not $10k). After 6 months, your account value becomes $10,356, which is equivalent to 7.12% rate per annum. Keep doing this exercise for 6 months, you will find the interest for 3rd, 4th, 5th and 6th months are all $60. Note that the 2nd month interest is $56, different from 1st month $60. Multiply by 400, your $10k i-bond value becomes $10,116 (this is the number you will see in 5/2022). Instead, monthly interest is calculated using pseudo-monthly compounding.įor 1st month, the $25 bond grows to $25.00 * ( 1 + 7.12%/2 ) ^ (1/6) = $25.14617975, rounded to $25.15. That would be equivalent to 7.20% not 7.12%. You are not getting $60 interest for 6 months for a total of $360.00. Now you may think the monthly interest for $25 bond is =$25.00 * 7.12% / 12 = $0.15. So a $10k bond value will always be a multiple of $4.00 (=400 x $0.01). The base $25 bond value is rounded to the nearest penny. So a $10k purchase is actually 400x $25 i-bonds. The discrepancy occurs because of 3 reasons: (1) $25 denomination, (2) rounding (3) pseudo-monthly compounding.Īll I-bond values are based on the $25 bond. Why? This is perhaps puzzling to most readers. You may think the 1st month interest is equal to $10k * 7.12% / 12 = $59.33. Even if you have accrued interests for 4 months (Dec, Jan, Feb and March), the account value will only display the 1st month interest because the latter 3 months are subject to penalty. Your $10,060 account value reflects 3-month penalty. There are 2 parts to the calculation behind $10,060.00. But my account value shows as $10,060.00. Lately, I have seen several ppl asking the same question about I-bond (Series I Savings Bond) interest. Here, please treat others with respect, stay on-topic, and avoid self-promotion.Īlways do your own research before acting on any information or advice that you read on Reddit. Get your financial house in order, learn how to better manage your money, and invest for your future. Banking Megathread: FDIC, NCUA, and your cash.Private communication is not safe on Reddit. Scam alert: Ignore any private messages or chat requests. ![]()
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