Comments on: Confounding compounding calculations http://www.savings-bond-advisor.com/confounding-compounding-calculations/ Thu, 18 Mar 2010 18:19:30 +0000 http://wordpress.org/?v=2.0.4 by: Tom Adams http://www.savings-bond-advisor.com/confounding-compounding-calculations/#comment-2861 Thu, 05 Apr 2007 14:53:17 +0000 http://www.savings-bond-advisor.com/confounding-compounding-calculations/#comment-2861 Rich - what's inexplicable to me is the interest rates you show in your comment. While the amounts you show are correct - and are the total amount of interest that I bond had earned up to that date - the rates you show for those months aren't correct. In Jan 06 this I bond earned 4.70%. In Jan 07 it earned 2.11%. That's what accounts for the 2006 interest being twice as much as the 2007 interest. I think you may misunderstand <a href="http://www.savings-bond-advisor.com/series-i-interest-rate-rules/" rel="nofollow">how I bond interest rates are determined</a>. Tom Adams Rich - what's inexplicable to me is the interest rates you show in your comment.

While the amounts you show are correct - and are the total amount of interest that I bond had earned up to that date - the rates you show for those months aren't correct.

In Jan 06 this I bond earned 4.70%. In Jan 07 it earned 2.11%. That's what accounts for the 2006 interest being twice as much as the 2007 interest.

I think you may misunderstand how I bond interest rates are determined.

Tom Adams

]]> by: Rich http://www.savings-bond-advisor.com/confounding-compounding-calculations/#comment-2860 Thu, 05 Apr 2007 14:06:25 +0000 http://www.savings-bond-advisor.com/confounding-compounding-calculations/#comment-2860 Another inexplicable factor is that the delta in interest earned from month to month can decrease even though the interest rate does not. Example $10,000 I Bond purchase Aug 2003 Earnings rate is 4.52% (Nov06) Feb 07 calculated interest earned is $1412 Jan 07 calculated interest earned is $1392 Interest increased by $20 between Jan & Feb (1412-1392) Same $10,000 I Bond purchase Aug 2003 Earnings rate is 4.12% (Nov05) Feb 06 calculated interest earned is $848 Jan 06 calculated interest earned is $808 Interest increased by $40 from between Jan & Feb (848-808) Another inexplicable factor is that the delta in interest earned from month to month can decrease even though the interest rate does not.

Example

$10,000 I Bond purchase Aug 2003
Earnings rate is 4.52% (Nov06)
Feb 07 calculated interest earned is $1412
Jan 07 calculated interest earned is $1392
Interest increased by $20 between Jan & Feb (1412-1392)

Same $10,000 I Bond purchase Aug 2003
Earnings rate is 4.12% (Nov05)
Feb 06 calculated interest earned is $848
Jan 06 calculated interest earned is $808
Interest increased by $40 from between Jan & Feb (848-808)

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