US Savings Bonds

Posts Tagged ‘investing’

It had to be, President Barack Obama!

Question: Population growth q: A US savings bond for $500 as an interest reate of 11% compounded monthly…?

A US savings bond for $500 as an interest reate of 11% compounded monthly…?
a. How much will the bond be worth when it matures after 25 years?

Answer: a) since interest is compounded monthly adjust the interest rate to per month
r = 11/12% per month, n = 12×25 months
using compound interest formula

Value at end of 25th year = 500(1 + (11/12)/100)^(12×25)

b)
value at end of each year = compounded value – inflation
value end of 1st year
= 500(1 + (11/12)/100)^12 – 0.3(500( 1 + (11/12)/100)^(12)) = 0.7(500(1 + (11/12)/100)^12)

value end of 2nd year = value end of 1st year – inflation
= 0.7(500(1 + (11/12)/100)^12) – 0.3×0.7(500(1 + (11/12)/100)^12)
= 0.7^2(500(1 + (11/12)/100)^12)

value end of 3rd year = value end of 2nd year – inflation
= 0.7^2(500(1 + (11/12)/100)^12) – 0.3×0.7^2(500(1 + (11/12)/100)^12)
= 0.7^3(500(1 + (11/12)/100)^12)

looks like a pattern is developing!

Value end of 25th year = 0.7^25(500(1 + (11/12)/100)^12

You need to calculate these as ALL the hard work has been done for you!

Rare Recording of Ludwig von Mises: Wage Earners and Employers

Question: Can someone explain to me the procedures, history, and the positives vs the negatives of Savings Bonds?

I’ve been looking at ways to invest money, and a guy at work said I should look into us goverment Savings Bonds. What can yal tell me about them, or better yet, any websites that can give me more info? Has anyone done this? Is this an oudated method? I’m a penny pencher and would buy cd’s but just don’t have the minimum 1k laying around to invest.

Answer: This is still a good and current form of saving money, although it’s a long term invest ment either 10 or 20 years.
The good thing is that the savings bond is guaranteed by the government, and its face value is high compared to the initial investment. usually about 40%.
The done side is that if you should need the funds fast, you can cash in premature bonds, but it takes time to figure the rate and amount of interest earned and time to get the funds returned. However at maturity you can cash them at any bank for face value.
You can purchase bonds at a Bank or From the treasury direct.
Also city bonds are another great investment. When a city offers bonds for a project like building a new jail or something you can purchase these bonds through the city hall. These bonds also have a 5,7,10,15,20 year term life depending on the bond but also pay a substantial return when matured.

President Wilson Arrives in New York to Lead Fourth Liberty Loan Parade [1918]