Treasury Savings Bond Estimator
Use this calculator to estimate the future value of a Treasury savings bond based on its purchase amount, an assumed annual interest rate, and the number of years it will be held. Please note that actual Treasury bond interest rates can vary over time (especially for I bonds) and this calculator provides an estimation based on a fixed rate.
Understanding Treasury Savings Bonds
Treasury savings bonds are low-risk, interest-earning debt securities issued by the U.S. Department of the Treasury. They are a popular investment choice for individuals looking for a safe way to save money, often for long-term goals like education or retirement. The two most common types available today are Series EE bonds and Series I bonds.
Series EE Bonds
Series EE bonds are purchased at face value and earn a fixed interest rate for 20 years. After 20 years, they are guaranteed to double in value, meaning they will have earned an average annual yield of approximately 3.5% over that period. They continue to earn interest for up to 30 years. The interest is tax-deferred until you cash the bond or it stops earning interest.
Series I Bonds
Series I bonds are designed to protect your investment from inflation. Their interest rate is a combination of a fixed rate (which can be zero) and an inflation rate, which is adjusted every six months (May and November). This means the interest rate on an I bond can change over time, making its future value less predictable than an EE bond. Like EE bonds, interest is tax-deferred for up to 30 years.
How This Calculator Works
This calculator provides an estimation of a savings bond's future value using a compound interest formula. You input the initial purchase amount, an assumed annual interest rate, and the number of years you plan to hold the bond. It then calculates the estimated total value and the total interest earned over that period.
It's important to note that this calculator uses a fixed annual rate for simplicity. Actual Treasury bond interest rates, especially for Series I bonds, can fluctuate. For precise current values of your specific bonds, you should always refer to your TreasuryDirect account or the official TreasuryDirect website.
Example Calculation
Let's say you purchase a savings bond for $500 and assume it earns an average annual interest rate of 3.5% over 10 years:
- Purchase Amount: $500
- Assumed Annual Rate: 3.5%
- Holding Period: 10 Years
Using the calculator:
Estimated Future Value = $500 * (1 + 0.035)^10 ≈ $705.30
Total Interest Earned = $705.30 – $500 = $205.30
This example demonstrates how your initial investment can grow over time, highlighting the power of compound interest.