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.