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David,

I finally read your article on Inflation-Protected
Investments from 6/26/00.

I have a question about the interest on the I Bonds.
Is the interest compounded? In other words, does the
monthly interest earn interest in the future or does
only the original principal earn interest?

Thanks,
mkt
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Mkt asks:

<<I have a question about the interest on the I Bonds. Is the interest compounded? In other words, does the monthly interest earn interest in the future or does only the original principal earn interest?>>

The interest is paid monthly and compounded semiannually. Thus, the interest does earn interest, but there is a time lag until the next semiannual compounding period before it does.

Regards..Pixy
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