I Bonds Calculator

The I Bonds Calculator allows users to estimate their potential earnings, penalties, and effective annual rate from purchasing I Bonds based on inputted purchase details, fixed and inflation rates, and holding period.

Use Our I Bonds Calculator

Step-by-Step Guide to Using the I Bonds Calculator

Input Details

Begin by entering the required details in the input fields of the I Bonds Calculator. These fields will help calculate the potential returns and penalties associated with your I Bonds investment.

  1. Enter the Purchase Amount ($): In this field, input the amount you wish to invest in I Bonds. The amount must be between $25 and $10,000, inclusive. Make sure this is a required field, so ensure it is filled out accurately.

  2. Select the Purchase Date: Provide the date on which the bonds were or will be purchased. The date must fall between January 1, 2000, and December 31, 2024. This is a mandatory entry.

  3. Input the Fixed Rate (%): Enter the fixed interest rate associated with the I Bonds. Acceptable values range from 0% to 100%, with precision up to two decimal places. This entry is also required.

  4. Enter the Inflation Rate (%): Provide the expected inflation rate. The rate should range from -100% to 100%, with the possibility to enter values up to two decimal places. It is important to complete this required entry.

  5. Select the Holding Period: Choose the period for which you intend to hold the I Bonds. The options available are: “Less than 1 year,” “1-5 years,” or “5+ years.” Make sure to select one as this is a required field.

Understand the Result Fields

Once you have entered all the necessary input details, the calculator will provide various result fields that summarize your investment’s performance.

  1. Composite Rate: This field calculates the adjusted rate combining the fixed and inflation rates using the formula: fixedRate/100 + (2 * inflationRate/100) + ((fixedRate/100) * (inflationRate/100)). It is displayed as a percentage with two decimal places.

  2. Early Redemption Penalty: If the holding period is less than 1 year, this field displays any penalties for early redemption. The penalty is calculated as purchaseAmount * compositeRate * 0.25 or zero otherwise. The amount is provided in USD with two decimal points.

  3. Interest Earned: This represents the total interest accumulated over time, calculated as purchaseAmount * compositeRate * yearsBetween(purchaseDate, today()). It is presented in USD.

  4. Total Value: This shows the total value of your I Bonds upon redemption and is given by the formula: purchaseAmount + interestEarned - earlyRedemptionPenalty. The value is in USD.

  5. Effective Annual Rate: This field calculates the effective annualized yield using the formula: (totalValue - purchaseAmount) / (purchaseAmount * yearsBetween(purchaseDate, today())). It is expressed as a percentage with two decimal points.

Finalize and Interpret Results

Review the calculated results to understand the potential earnings and penalties of your I Bonds investment. Use these insights to make informed decisions regarding buying or redeeming I Bonds based on your financial goals and market conditions.