EE bond doubling question

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tibbitts
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EE bond doubling question

Post by tibbitts » Tue Jul 09, 2019 6:44 pm

My July 2002 $500 EE bonds finally doubled, but I was expecting to find them worth $1000 this month (July 2019), not $1002. I'll take the $2, but where I am miscalculating the doubling?

kaneohe
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Re: EE bond doubling question

Post by kaneohe » Tue Jul 09, 2019 7:10 pm

https://www.treasurydirect.gov/BC/SBCPrice
https://www.treasurydirect.gov/BC/SBCPrice

This calculator shows 500 in 7/2002 going to 1000 in 7/2019. btw a 500 value initially has a face value of 1000 and is usually called
a 1000 bond?......ETA:.....the treasury website says this is true for paper bonds. Electronic bonds have initial value = face value.
Last edited by kaneohe on Tue Jul 09, 2019 7:29 pm, edited 1 time in total.

tj
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Re: EE bond doubling question

Post by tj » Tue Jul 09, 2019 7:16 pm

I thought it takes 20 years to double?

kaneohe
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Re: EE bond doubling question

Post by kaneohe » Tue Jul 09, 2019 7:33 pm

tj wrote:
Tue Jul 09, 2019 7:16 pm
I thought it takes 20 years to double?
"Treasury guarantees that for an electronic EE Bond with a June 2003 or later issue date, after 20 years, the redemption (cash-in) value will be at least twice the purchase price of the bond." https://www.treasurydirect.gov/indiv/re ... ndafer.htm

looks like the guarantee applies to certain dates. perhaps there was an earlier guarantee that was different?

SchruteB&B
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Re: EE bond doubling question

Post by SchruteB&B » Tue Jul 09, 2019 7:34 pm

tj wrote:
Tue Jul 09, 2019 7:16 pm
I thought it takes 20 years to double?
Takes that long now. Used to take 17 years.

kaneohe
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Re: EE bond doubling question

Post by kaneohe » Tue Jul 09, 2019 7:37 pm

https://www.treasurydirect.gov/indiv/re ... 042005.htm

"Treasury guarantees that an EE Bond (whether paper bought at half of face value or electronic bought at full face value) will be worth at least double its purchase price when the bond reaches original maturity. Original maturity is a point part way into the bond's 30 year life.

For EE Bonds with issue dates from May 1, 1997 through May 1, 2003, original maturity is 17 years after the issue date.
For EE Bonds with issue dates from June 1, 2003 through April 1, 2005, original maturity is 20 years after the issue date."

Topic Author
tibbitts
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Re: EE bond doubling question

Post by tibbitts » Tue Jul 09, 2019 7:57 pm

kaneohe wrote:
Tue Jul 09, 2019 7:10 pm
https://www.treasurydirect.gov/BC/SBCPrice
https://www.treasurydirect.gov/BC/SBCPrice

This calculator shows 500 in 7/2002 going to 1000 in 7/2019. btw a 500 value initially has a face value of 1000 and is usually called
a 1000 bond?......ETA:.....the treasury website says this is true for paper bonds. Electronic bonds have initial value = face value.
I converted my bonds to electronic (not a choice in many situations), and when I log in to view their value in my TD account, it definitely shows $1002.

bernoulli
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Re: EE bond doubling question

Post by bernoulli » Wed Jul 10, 2019 9:25 am

I think it is the new interest.
Last edited by bernoulli on Wed Jul 10, 2019 11:55 am, edited 1 time in total.

Thesaints
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Re: EE bond doubling question

Post by Thesaints » Wed Jul 10, 2019 11:05 am

The guarantee is to at least double. What is the rate of the bond ?

larsm
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Re: EE bond doubling question

Post by larsm » Wed Jul 10, 2019 11:07 am

Once they double, assuming you continue to hold, they continue to earn interest till maturity date.

Presumably the $2 is new interest earned.

Thesaints
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Re: EE bond doubling question

Post by Thesaints » Wed Jul 10, 2019 11:24 am

Btw, treasury’s savings bonds calculator says $1,000 for the july/2002 issue.
Anyway, in 2002 EE Series were still floating rate bonds, so you would have to calculate for the rate changing every 6 months. Not impossible that you got to 1,002 due to rounding and that would supersede the doubling guarantee as I wrote above.

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Phineas J. Whoopee
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Re: EE bond doubling question

Post by Phineas J. Whoopee » Wed Jul 10, 2019 2:56 pm

The Treasury calculates savings bond returns as if they were a collection of the lowest-denomination bonds available at purchase. $500 is calculated as if it were twenty $25 savings bonds, round-off error and all.
PJW

FactualFran
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Re: EE bond doubling question

Post by FactualFran » Wed Jul 10, 2019 3:16 pm

Thesaints wrote:
Wed Jul 10, 2019 11:24 am
Btw, treasury’s savings bonds calculator says $1,000 for the july/2002 issue.
Anyway, in 2002 EE Series were still floating rate bonds, so you would have to calculate for the rate changing every 6 months. Not impossible that you got to 1,002 due to rounding and that would supersede the doubling guarantee as I wrote above.
In this case, the redemption amount due to the variable rate over time would have be $735.60 for a $1,000 EE Savings Bond issued July 2002. The Savings Bond Calculator is correct. I don't know why Treasury Direct is reporting a different redemption value for an electronic Savings Bond.

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tibbitts
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Re: EE bond doubling question

Post by tibbitts » Wed Jul 10, 2019 9:28 pm

FactualFran wrote:
Wed Jul 10, 2019 3:16 pm
Thesaints wrote:
Wed Jul 10, 2019 11:24 am
Btw, treasury’s savings bonds calculator says $1,000 for the july/2002 issue.
Anyway, in 2002 EE Series were still floating rate bonds, so you would have to calculate for the rate changing every 6 months. Not impossible that you got to 1,002 due to rounding and that would supersede the doubling guarantee as I wrote above.
In this case, the redemption amount due to the variable rate over time would have be $735.60 for a $1,000 EE Savings Bond issued July 2002. The Savings Bond Calculator is correct. I don't know why Treasury Direct is reporting a different redemption value for an electronic Savings Bond.
Correct, the value was nowhere near $1000 before I checked this month - it was in the $700s, that's all I remember. I'll have another change to test this next month - then not again for 4+ years.

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LadyGeek
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Re: EE bond doubling question

Post by LadyGeek » Wed Jul 10, 2019 9:51 pm

This thread is now in the Investing - Theory, News & General forum (general question).
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

FactualFran
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Re: EE bond doubling question

Post by FactualFran » Thu Jul 11, 2019 2:18 pm

larsm wrote:
Wed Jul 10, 2019 11:07 am
Once they double, assuming you continue to hold, they continue to earn interest till maturity date.

Presumably the $2 is new interest earned.
That is an accurate presumption. The redemption value of an EE bond with an issue month of Jul. 2002 that is redeemed in Aug. 2019 should be $1,002. The redemption value is the same for an EE bond with an issue month of Jun. 2002 that is redeemed in Jul. 2019.

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