I-Bond Interest Explained: When Does It Show Up & What's The I-Bond Calculator Formula?
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- Опубліковано 21 вер 2024
- I-Bonds 2022! I'll go through:
✔️ How to calculate I-Bond interest (the “secret” I-Bond math formula that has been a mystery for quite some time until we cracked the riddle recently)
✔️ when does I-Bond interest show up (for those of you who bought or are buying between November 2021 and October 2022 at the different I Bonds rates)
✔️ how much you’ve earned vs how much actually shows up & why the numbers don’t “appear to match” the I Bond interest rate you were originally quoted
✔️ how to use the Treasury Direct I-Bond interest calculator (which has the current I Bonds 9.62 rate & all the historical I-Bond rates built in as well) - step-by-step as always
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👉 LINK TO TD I-BOND CALCULATOR: www.treasurydirect.gov/BC/SBCPrice
HOW TO FIND YOUR I-BOND INTEREST ACCRUED/ "WHAT SHOWS UP" IN YOUR TD ACCOUNT: When you log-in to your TD account, click on Current Holdings at the very top, then scroll down to Savings Bonds, select Series I Savings Bond & hit Submit. What will show up is a list of I-Bonds you've purchased & for each one, when you purchased it, what rate it's earning, how much you bought initially (the face value) as well as the current value (face value + interest accrued/"what shows up"). If, after doing this AND watching the video, you still feel there are issues, then I'd highly recommend calling TreasuryDirect to understand what's wrong.
Have you ever thought of creating a somewhat simplified website with an ibond value calculator ? Where the user just plugs in the date of purchase, amount, etc. ? The annuity marketers all do it already, but they have the budget. What a godsend that would be over the TD website ! Kudos Diamond Nest Egg !
@@eddenoy321 I think about a lot of things, but I think I'll stick to what I'm good at 🙂
I created an Excel spreadsheet for this based on your information. Works like a charm. If you want me to provide it, I'd be happy to. 😉
@@scottalker541 sure - send it over!
@@DiamondNestEgg Ok Jennifer, I sent it over.
You should get the Nobel Prize in Economics for figuring this all out. My eyes glazed over after about 10 minutes…
She is awesome. I have to watch her videos once, maybe even many times because I have the same problem. I am guessing she is/was a CPA or Actuary.
I've been writing about I Bonds for 11 years and I have never seen this goof-ball interest formula explained so clearly. I knew rounding was involved, but not exactly how. This is quite the achievement.
Thanks! I just found & subscribed to your blog - wish I knew about it earlier.
@@DiamondNestEgg I am posting an article on this topic tomorrow, which includes your video.
@@DRE_vid Looking forward to reading the article & going through the rest of your blog this week!
Honestly this is the most comprehensive information I've seen on I bonds. This is extremely useful. Thank you for your hard work.
Thank you for this comprehensive explanation. I put in $1000 in ibonds in April when the hype train was rolling for it, unfortunately all I could afford at the time, so I know I'm only looking at maybe $70 or so a year at the current interest, and I was wondering why it only showed $6 in interest gained in August on my TD account. Now I get it. And not only was your video comprehensive, you have a great down-to-earth presentation unlike so many of the obnoxious "money-bro" channels out there for financial advise! Thanks again!
As an accounting professor, I can tell you were one of those dream students. :) Great explanations of the details.
This definitely confused me as well - thanks for the explanation
The Treasury should pay you a stipend for your work, seriously. Great job, you are my new favorite You-tuber.
This is an excellent explanation. I had no idea why interest was showing / not showing in my Treasury Direct account or when it might show up. I'm usually no slouch when it comes to this stuff and couldn't find any information on how to figure this out. It's amazing that you figured this out AND presented it in such an easily understandable way.
I wonder why our government does not make this clearer, as well as showing the calculation, similar to your presentation, to satisfy our curiosity. In any case, the fact that you are satisfied with Treasury's calculation means that I can stop worrying about it any more myself. Thank you!
Thank you so much for your video. I purchased $5000 worth of I bonds issued April 2022 and checked today and they had a value of $5302. I had no idea how they arrived at this amount until I watched you video. You have a new fan!
What a lot of work this must have been to figure this out. I feel like you reverse engineered a crashed UFO. Thank you for getting to the bottom of this and explaining it so well.
I bought 6,000 in May and 2,000 more today. You can't pass this up. I plan to use it as a short-term investment. Thanks for the information on this. You sound pretty excited about this as I am. Thanks, again
Your detailed work and explanation is above and beyond! Thanks to your content, I can understand what is really happening annually with I bonds. No one else offers information like you do, thanks a bunch!
The projected earnings are not bad. We had a savings account with Barclays that yielded 1.2% in earned interest but then when the pandemic hit and interest rates plummeted, it went down to .4%. It's only gone up to .6% so this is a good alternative. Thanks for your illustrations/explanation.
You have no idea how satisfying this video was! Thank you for all of your hard work in figuring out the formula. Normally, my eyes would glaze over at the first mention of a formula, but you were engaging and made it easy to understand. For that reason, I instantly subscribed!
I am brand new to I bonds and this was fabulous...thanks for making this digestible.
I brought I bond on April 22, and I just checked my account today, it is exactly $604 interest . You’re awesome 👍.
Found this video a little late, but so glad I did! This is an excellent explanation of how to compute my I-Bond interest rate. I've been going crazy trying to figure this out... between fixed rate, inflation rate, composite rate, semi-annual compounding, 3-month penalty... and on and on. Thanks so much for your effort in researching this and explaining it so clearly!! This helps me with my taxes as I am planning to report my savings bond interest each year and TreasuryDirect only provides a 1099 when the bonds mature (I think?). Thanks again!!!
Extremely helpful and your numbers were valid. I purchased 10k in I bonds in Dec '21 and Jan '22. Now in August 2022 I have earned a total of $532 in interest (shown in my Treasury Direct Account). This $532 = $296 + $236. Thank you for helping break this down for me!
When can you buy the next $10,000 limit? January 2023 or December 2022?
Just started buying I-bonds last month and I'm not looking anywhere but your videos for information. You explain things so well. Even the formulas and I hate formulas. Treasury Direct should put a link to your channel.
I came across the channel recently and immediately subscribed after watching a few episode. The explanation is so clear. The channel is underrated!!
This video was extremely helpful explaining how interest rates are calculated. I truly appreciate your prompt reply to my question regarding the 1st appearance of interest in my TD account.
Awesome and concise explanation of how to calculate interest. Was curious about the discrepancy on the smaller interest the second month. Read through all 676 comments at the time. Too bad so may did not, they would have seen probably 60 - 70 comments asking about it! You have so much patience!
Thank you so much for for taking the time and energy for making this video! The charts and graphs of the interest earned & overall cumulative was a HUGE HELP!! I’m brand new to ibond investing but I went for it and bought $10,000 I plan to keep doing so every year while the rates are good! Thank you so much again for creating this content and cracking the numbers!!❤❤
Best explanation of I Bonds thus far thank you
How to use gifts to time your purchases. Assuming you have a gift receiver and have maxed out your purchases for the year, you can use a gift to time your purchase. Example, today the interest rate is 9.62%. Let's say that the November reset goes to 10%. Since you have already purchased your limit this year, give a gift that you buy on October 28 or so. You get 6 months of 9.62% and then 6 months of 10%. The receipent waits until April of the following year to do the next step. If the interest rate is still attractive, use the annual limit to buy more bonds. If the interest rate drops, deliver the gift and cash it out in 6 months or better yet 9 months.
Thanks for all your great research. It really got me started in this area in a great way.
I’ll be the first to say, I never comment on videos, but I seriously felt the need to for this one. I’m a finance idiot, hands down. I found the video because I wanted to know how the interest was calculated and added up for IBonds because the numbers I was seeing didn’t make sense. Even watching the video I kept sitting here saying, $60 is not 7% of 10000, how does this make sense?! After watching the second half of the video 5 times it finally hit me lol. I never would have figured it out if it weren’t for your video, so thank you so very much!!!!
I'm glad you figured it out in the end! I went through a lot of pots of coffee myself - it's not exactly straight-forward.
@@DiamondNestEgg couldn’t have done it without you!
I've talked to multiple IRS agents about T. Bill discount rates. None of them fully understood it. I can only imagine their take on I-Bonds. Jennifer should give seminars to Federal employees!
Thanks for the research, I checked my ibond after 12months and it was short of what I should have earned, but makes sense that it only shows what I can withdraw.
Thank you for the great video. I purchased my first i bonds in April because of you. 😁
Awesome! I used to use Treasury's stand-alone app called "Savings Bond Wizard" to track a handful of EE savings bonds I had purchased way back in the 1980's through payroll deductions. You, Jennifer, are truly an I Bond Wizard!
OMG I love you! I was determined to figure out the math and it was driving me bonkers...no WAY I'd ever have figured out the $25 multiples and rounding! THANK YOU!!!!!
One thing I don't understand: so the first 3 months of interest never appear within the first 5 years. You say that what you see in the portal matches the amount you get when you close your account. But the Treasury site says they take out the LAST 3 months of interest, not the first 3. Nearly everyone opens an account when the rates are high and closes when they're low, so this screws us out of the months with a high rate rather than low. Am I missing something?
Exact wording from their site: If you cash in the bond in less than 5 years, you lose the last 3 months of interest. For example, if you cash in the bond after 18 months, you get the first 15 months of interest.
Very clear explanation of the details on how the interest rates are calculated and when they show up. Great job and thank you!
Excellent explanations with well-designed examples! Thank you!
Excellent job in clearly explaining the nuances of the I Bond interest cumulations and calculations. Thanks Jennifer
hello,
the chart at the 23:33 point when you discuss redeeming before the five year penalty you circle the bottom line and say there will be a three month penalty, but you circled the cumulative line and I think you wanted to circle the "monthly interest earned" line at the top. maybe you have already gotten this comment but i didn't want to read all 496 comments to see if this has been pointed out before. very nice presentation. thanks.
Hello Jenniffer: I have used the exact math formula. (1+i/2)^N/6. The investment was like this Bought 10,000 on August 2022 The results of the Bond calculator. USING 1000 Paper bond Results were DEC 1008. JAN 1015.6 FEB 1023.6 MAR. 1032. APR 1040 MAY 1048. However when using the Excel formula (using the 25 BOND and rounding to the nearest CENT. This are the results for the 400 x $25. DEC 10080 JAN 10160 FEB 10240 MAR 10320 APRIL 10404 .MAY 10488. What i see is that the amount via your formula The one that frowns exponentially makes a lot of more sense. Every month one should receive at least the same amount as the previous (if not a bit more). Compound interest. But JAN shows only 156 instead of 160. and in may the difference is already 8 dollars. 488 (formula) vs Calculatar 480. So I am sure I used the formula correctly.
Jennifer...you are amazing. You make everything sound so interesting and are so informative. Your explanations are crystal clear. I wish that I had you as one of my college professors, as you would excite my interest in whatever subject matter was being discussed. You are absolutely a gifted talent regarding disseminating information to your followers. So happy that I found your videos. You should be proud of the work that you are doing to help others. Most appreciative and thankful!! Neal
Best I-Bond explainer on UA-cam!!!
Thank you ! I just picked up your channel...I am now a Super Saver and started investing into I Bonds for the first time this month. Great explanation and I'm on the long term hold of 5 to 10 years...so looking forward to the info and details as I ride the I Bond wave..Thanks for everything and keep the videos coming as we head into 2023.
You are the best! Really appreciate all the information
Thank you! Excellent information, clear concise and easy to understand.
Your question re: 4months interest showing in account at 5 year anniversary ( around 5:50 into your GREAT Video ), yes , this has been my experience - - the regular one month interest plus the 3 months interest subject to forfeiture if redeemed prior to 5 year holding period are credited to account once the 5 year holding period has been reached. Terrific video, your presentation skills and knowledge are just super. Thank you for sharing !
Thanks for confirming!!
Another excellent video. I saw my first interest of $60 in my account today, yeah!
THANK YOU SO MUCH FOR THIS VIDEO!! I was sitting here on the first day of month 4 wondering where the hell my interest was 🤣
Wow - Your channel is really a great source of info! Thanks for posting this stuff and all the positive energy you put into these videos!
Thank you so much for this. I think I'm starting to understand it. I bought $10,000 in April 2022, and got half the interest I was expecting in August. Now I understand why - 3 months subtracted in case I withdraw within the first 5 years.
Great video it helped me understand the process to make better decsions! I purchased Apr 2022, since it's been over 1 year I was going to withdraw without understanding if I should or hold. After coming across your video, I decided to hold as my account now shows 6.48% which I now know will update every 6 months in Sep & Mar. 6.48% is still a great rate given the current purchase rate is down to 4.30%. I will set a reminder to review my account every 6 months to make a better decision on the next 6 months of interest and decide to withdraw and invest in something better of let it ride until the 5-year mark so I can also claim that extra 3 months of interest.
Great video and content. Thank you.
Apologies if this question has been brought up before.... I checked the monthly accrued interest calculation you did in the example of buying an I-Bond in April and the subsequent interest calculation for the following 12 months. It seems inconsistent to me. So my question is: Why would the calculated monthly interest be as follows:
April $60 ----> OK
May $56(???) ---> Why not $60?
June through September $60 each month ----> OK
October $80
November, December $84 (????)
January $80
February $84 (????)
March $88 (!!!!????)
If the calculation is based on the initial amount for the 6 month period, the first six months would yield $60 without any $54 in any month.
Second question.... For the second semi-annual interest calculations, shouldn't the basis be the value of the bond at the 6 month? In other words, $10300?
Thank you in advance.... just a bit confused.
Hi - Here's the video on how I-Bond interest works & when it shows up in your account: ua-cam.com/video/9hfHoSijJEk/v-deo.html
Watched your video 2x. Most concise and well explained I bonds video I've found thus far. You answered many of my questions!
I bought my first I Bond in April 2022 and just logged into my account and was like "WTF?" Thanks for explaining this!
Very closed, I bought 20k Ibond for my child 10K on Dec 2021, and 10K on Jan 2022. As of today 08/2022, I see $532 in interested money. I emailed them and ask about the formula and never got back anything useful. Thanks for your hard work
Thanks for demystifying something only our government could make so complex. I wish I had known about I Bonds long ago. This is a perfect place to start something like an emergency or rainy day fund, knowing you can't tap it for at least the first year.
Extremely Informative video and delivered at just the perfect pace. I really appreciate you doing this!
Well done Jennifer! I knew you'd explain this to make it all clear, and even more detail than I could have imagined! Bravo!! And thanks for the shout out! 😀
Thanks for letting me use the email they sent you!
@@DiamondNestEgg thank you so much
Dear DN worked out just like you said. Thank you for your valuable time in figuring this out. Important (as you said)- Buy late in the month, Sell early in the month. Thank you !!!
I just found your channel a few days ago, and am now watching your previous videos. You are so informed and knowledgeable. I decided to buy a 10k I Bond .My husband is also going to buy one in October or November. I'm still watching your videos before we decide.
This was absolutely the best explanation I have ever seen...Bravo!!
good video answered all my questions. I should have watched before I bought on 5/1/2022 . I thought I needed to wait to get 9.62%
Thanks for the explanation! I just want to point out that the interest is not compounded monthly, rather it is compounded semi-annually just as the Treasury website states. Your formula is calculating the accrued interest for the period according to the fraction of the six month period that has elapsed. If the interest was compounded monthly, the rate in the formula would be divided by 12 rather than 2 to get the monthly rate, then the exponent would not be divided by 6 and the end result would be a higher amount of interest.
Can't believe this is free.
Thank you for this awesome video, so well explained and demonstrated! TreasuryDirect must have tons of people calling them wondering what's happening to their interest if they didn't watch your video 😀
Your a breath of fresh air. Thank you for posting these videos. They are very helpful in navigating through the ibond labyrinth.
Don Cavin
That was certainly an enjoyable half hour. Made me get out the old 2007 version of excel and make some coffee! I really did enjoy learning all that you covered in this one video. Thank you very much. Looking forward to watching some of your other work as well. I agree with others on the channel, you should be advising the Fed. 💚
I was able to match the results for the second 6 months, months 7 -12 in the table at 23:28 by adding by adding 89 cents (356 / 400) of prior interest or 25.89, and adding $356 to the second formula: x (10000 / 25) + 356.
Thank you so much for investigating and explaining how I-bond interest is calculated and posted. I had searched online but couldn’t find this information anywhere. Your I-bond videos are awesome!
That was absolutely the most helpful, explained video I’ve ever seen. Amazing job there. You have a new follower now. Thank you 🙌🙌🙌
Thank you for the great insight! I've used the calculations and noticed that the rounding to the nearest cent approach can also reduce the amount of interest received. Using the 9.62% rate (May 2022 - Oct 2022) with the calculations provided results in $480 of interest on a $10k IBond over the first 6 months. I was expecting $481 (half of 9.62% given only 6 months). Very small difference as you state, but just a note that the rounding to the nearest cent approach taken by TD cuts both ways.
Thanks for sharing - and yes, it can cut both ways.
Thanks for an easy to understand video. However, since I'm a senior with memory problems I'm never going to remember all this stuff later. Is there any way you can create a pdf which includes all the examples and your explanations? I would really appreciate that since then I could download it and refer to it anytime without going through the whole video every time I want to check on something. Thanks in advance
Great video, sepecially for figuring out the power of 1/6. My question is how come the monthly interest earning goes up and down? For example at 23:30, April and June interests are $60, but May is only $56. I would expect the earning would increase monotonically, or stay flat after the round-off.
See my reply/ explanation to M Jeffers
Outstandign explanation. Only place on the web I've been able to get this explanation!
Thank you this is exactly what I was looking for! I was not able to calculate my interest until I found this video. I'm surprised Treasury Direct doesn't even attempt to explain the specifics of how they calculate the interest. They should post a link to this on their website!
Thank you!
You answered all our questions and questions we haven't thought of yet.
Explained so well. I purchased one in May 2022 and was wondering when I would see some interest $$. Now I know. Thanks.
I know I’m a little late to this video. I just wanted some clarification on accrued interest. In your example (23:47 mark), it shows the interest for May 2022 is $56 however the month before (April) and the month after (June), the interest is $60 for each month. Similarly, for Jan 2023, the interest is $80 while for Dec 2022 and Feb 2023, the interest is $84. Is this right? Trying to understand why the interest dips for those months in the middle. Thanks for your really educative video!
Whew.... best explanation yet! Keep these great videos coming!! Now it makes sense! Thanks a million.
Glad I found your channel
You're my Super heroine! Seriously, thank you so much. So much added value here! Subscribed, liked, and saved to favorites!!!!!
Hello, thank you for this very detailed explanation. I’ve been trying to figure out why I hadn’t seen accumulation in my ibond account after buying in August of 2022 ( I was waiting until 2/2/23 to check it again) 😎
Thank you for making this video! I've been scratching my head for months trying to figure out exactly what your video explains. Very helpful :)
I just bought 10k I bonds after seeing your video! Will hold it for awhile!
you always have the info i need...thank you..was looking for my interest in my ibond account after 3 months, october is month 4, didnt see it, and then i came here and see it will actually show in month 5....thank you
Excellent clarity and breakdown, unlike anywhere else on financial youtube videos
OMG! I got the math to work after watching the video multiple times and reading through the comments. Thanks cuz I am one of those people that want the math to work! I have another question however...does interest accrue on the 1st of the month? (I have a discrepancy between my account and what the paper bond calculator states that I am trying to make sense of.)
Typically, it's the first of the month
Great vid. I'm a huge I bond fan. Just wish I knew about it earlier
Wow, thank you for your hard work. This was amazingly helpful. I’ve always struggled understanding this. I do have a question:
I bought Ibonds in 2015, I can see their current value (thanks to your videos), but is there a way to see the historical interest payments and values? Like quarterly or monthly?
Great information, presented and communicated very well. Thank you.
WOW! Brilliant! Love your video. I-bonds interest rates demystified. Thank you!
Thanks. Great explanation. I just had my first interest show up and now I understand it!!!
Thank you for explaining how the interest payouts work, now that I know there is a holding period it all makes sense!
Thanks for sharing Jennifer!! Am more confident with investing into I bonds after being educated watching you're video. 😊
Thank you so much! This explanation was the best information I could find on some of the "unexplainable" things I was experiencing with I-bonds. I have a new question: if you cash out early and they charge you the "last three month's interest" what if your I-bond was earning 0% the last three months? Would it then be zero penalty or would they go back to the last three months you earned some interest?
Based on your example, if your earned 0% interest in the last three months before redemption, you would pay zero penalty.
Many thanks Diamond for this video. It was super useful. I have one question. I made a deposit on June 2022 thinking that i will get an interest rate of 9.62%. since on May 2022 interest rates got revised from 6.48% to 9.62%. But on the treasury account i see it is 6.48%. Do you know why? should I contact treasury for this?
Thank you for great videos @Diamond NestEgg.
One Question - When can we expect to see the next interest rate of ibond, which would be applicable from November 2022 for the next 6 months?
My goal behind asking this question, is to know if there are signals through news and official resources, which currently hints us of the interest rate we may expect in November 2022? As I guess we might not need to wait long until November 2022, to know the ibond interest rate.
Looking forward to hearing from you.
👍 The Sept inflation number (released in early Oct) will be a very good predictor, but stay tuned - my next video later this month will go through the possible I-Bond rate scenarios
Thanks for your sharing!
I think it’s a good way to handle things and you explained it very well. Now I know why I have such a little amount of interest in my account, having bought my I-Bond in June, 2022.
One thing is confusing to me, though. Your example at 23:35, the second month shows $56 instead of $60. Then interest is $60 again for the next four months. Then, once the interest rate goes up to 9.62%, the interest is $80 the first month, goes up to $84, then back down to $80, then back up to $84 and $88. Why is that?
I’ve subscribed.
Are you planning to do a series on municipal bond investing? That would be a great topic, as it is also Federally tax free. I’m most interested in finding where to find the best municipal bonds for Georgia, Or some out-of-state bonds are an even better investment.
1. It has to do with the rounding in TD's formula
2. Munis are already on my list!
Thanks for the awesome info! I purchased my ibond in April 2022. Thank you so much for sharing this!!!!
This video was very informative. I finally was able to see how much interest I had earned as of today. Thank you very much.
Thank you so much for this excellent educational video! You are a True Advocate for the users of the system. I am definitely subscribing to your channel. Carry On Madam.
This was amazing!! Thank you so much for the visual and very detailed explanations