# In 2028, 1.40% EE bonds will earn 50% in one day

##### Thursday, May 15th, 2008

##### Categorized as: Series EE US Savings Bonds

The current offering of Series EE Savings bonds pays 1.4% for 20 years. However, they are also guaranteed to reach face value in 20 years. After 19 years and 11 months, at 1.4%, these bonds will have earned less than one-third of the interest needed to reach face value.

In one day – the day the bonds turn 20 – the value will jump by over two-thirds of the original investment. And you can be sure that there will be people who cash out a day early and lose the bump.

Here’s an example. A $1,000 face value EE bond requires a $500 investment. If you buy one today, then on any business day in April 2028 (after 19 years and 11 months), these bonds will have earned about $160 in interest and have a redemption value of about $660.

On the first business day of May 2028 the redemption value will jump to $1,000. The bond will have earned $500 in interest – a jump of $340 or a bit more than 50% of the previous day’s redemption value.

FDIC Insured Certificates of Deposit can pay 1 or 2% more than savings bonds when held for a similar length of time. See top CD Rates Below:

### 8 Comments

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Virtually every question about Savings Bonds has been asked and answered on this site multiple times. Use the search feature (see the box in the gray area near the top of this page) or the detailed menu on the lower part of the home page to find the information you're looking for. If you have a copy of Savings Bond Advisor, you can ask me a question here.

Tom Adams

On May 17th, 2008 Mike McCune said:Tom, I’m glad you took the time to figure this out as I never even tought about it – but I don’t think I want to own EE savings bonds currently. I hope our future is such that I don’t look back and wished I had – sort of like not wanting to buy I-bonds (with fixed rates north of 3%) back in ’98, ’99 and 2000 because returns on the stock market were so much better and inflation was nearly extinct! It is really hard to tell the future. Thanks. Mike.

On May 17th, 2008 Karl H. said:I had to do the math – you need about 3.52% to double your money in 20 years. So any EE bond earning less than that will jump in value on its 20 year anniversary. AT 1.4% bonds this jump is particularly noticeable!

On May 18th, 2008 Shane Williams said:Damn I have at least 15 EE bonds that will start maturing in 2020. Guess I made the right choice to invest in I bonds once thier % rate goes up.

On May 19th, 2008 Tom Adams said:To be clear, I don’t see this bump as a reason to invest in EE bonds, but as a reason

notto invest in them.It would be much better if the Treasury just set the rate at 3.5% and let the bonds earn the interest gradually instead of concentrating it all on one day.

Tom Adams

On May 21st, 2008 eugene losch said:By the rule of 72. Take the interest rate being received and divide into 72 and it will give the number of years to double your money. Example: 8% divided into 72 is 9 years to double.This is true for all interest rates. 1.4% divided into 72 is 51.43 years!!!!!!!!!!!!!!! How incredible and yet the same government will guarantee a mortgage of over 700,000 dollars for a household!!!!!!!!!!!!!!!

SORRY! MY RATIONAL MIND IS OVERWHELMED BY THIS KIND OF PSYCHOTIC THINKING!!!!!!!!!!

Best wishes

thanks

Eugene

On May 21st, 2008 Steve said:The “rule of 72” it’s not the Bible; it would take

only49.86 years for the initial capital to double at a 1.4% annual interest.What this has to do with the mortgage bailout it’s a mistery to me, anyway.

Speaking of which, the bailout (of mortgages and big financial firms) is absolutely disgusting and it makes me want to puke. It is plain immoral.

Yet, not doing anything could turn in an even worse damage for the rest of us, careful investors, as well. A sad situation indeed…

On May 22nd, 2008 Joseph said:The Rule of 72 is just an approximation of the time it takes to double one’s money at a certain interest rate. Just use any internet search engine to find the derivation of the this Rule. However, The RULE of 72 is pretty darn accurate for numbers within a defined range, i.e, 2%-18% but doesn’t even come close for large numbers. Example: If the interest rate is 72% the rule of 72 would give you a double in one year, but obviously that is not the case. At a 72% interest rate it would take 1.28 years to double your money, assuming annual compounding.

On June 1st, 2008 eugene losch said:I did not say the was the rule of 72 was the BIBLE or quote chapter & verse. but it is for those not taking calculus a quick way to figure out uncle sam is screwing them. Also a bond is loaning money and the us gov’t is borrowing and guaranteeing gse loans through fnm & fredie mac of up to 700,000 dollars BINGO!!!!!!!!!!!!!!!! connected.Mystery solved!!!!!!!!!!!!!!!!

And really 49.86 verses 51.43 50 yrs from now who cares about specifics!!!!!!!!!!!!!! IT IS A HALF A CENTURY!!!!!!!!!!!!!!!!