What is an EE Bond? Are they the same as savings bonds?
2007-03-04 05:40:44 · 7 answers · asked by step b 3 in Business & Finance ➔ Investing
The answer is that no one really knows. The government resets the interest rate every 6 months. So the interest that the bond earns is not constant. Now here is the interesting part. The government manipulates the interest rate to suit their purpose. They are quite capable of driving it to zero if they desire, which they for all particle purposes did from 2001 to 2005.
They currently yield 3.6%. If that rate were to prevail for 20 years, and if you paid $25 for a $50 paper bond, then in 20 years you would be able to redeem the bond for $50.71. This is all hypothetical not actual.
2007-03-04 08:27:45 · answer #1 · answered by Anonymous · 0⤊ 0⤋
EE Bond is a kind of savings bond. If the interest is used for education purposes you do not have to pay taxes on it.
EE bonds issued after May 2005 are fixed at 3.6% interest compunded semi-annually.
A $50 bond purchased today costs $25. In 20 years there are 40 periods of 6 months. The interest rate is 3.6/2=1.8.
The formula for the value after 20 years is $25 * (1+0.018)^40 = $51.03.
2007-03-04 05:57:36 · answer #2 · answered by arjking 1 · 0⤊ 0⤋
50 Savings Bond
2016-10-18 10:32:27 · answer #3 · answered by ? 4 · 0⤊ 0⤋
Bonds suck right now. Even Certifictate of Deposits and Online Savings accounts offer a higher rate of return that bonds.
It's like a seesaw... Interest goes up bonds go down. Bonds go up and interest rates go down.
Due to the Feds fear of a possible recession, interest rates have dramatically increased.
Bonds = 4% -5%
CDs & Savings = 5%-6%
Calculate by 20 years...
$50 x 5% = $2.50
$50 + $2.50 = 52.50
$52.50 x 20 (years) = $1050
2007-03-04 06:01:01 · answer #4 · answered by Geeeyaaa 4 · 0⤊ 0⤋
There are different types of savings bonds.
EE savings bonds are sold at 50% of their face value. So, they are worth less than their face value until the reach maturity. (Series I, or "eye" since the font on this makes that look strange, are sold at face value and earn interest beyond the face from the first month.)
See the links below for more info.
2007-03-04 05:49:54 · answer #5 · answered by ISOintelligentlife 4 · 0⤊ 0⤋
In 20 years, a $50.00 savings bond will be worth $50.00. It takes that long for them to mature, and a $50.00 bond only costs $25.00. So, you're waiting 20 years to make another $25.00, not the best investment in the world.
2007-03-04 05:51:27 · answer #6 · answered by andromedasview@sbcglobal.net 5 · 1⤊ 1⤋
100
2015-12-16 04:39:58 · answer #7 · answered by ? 1 · 0⤊ 0⤋