UnThreaded | Threaded | Whole Thread (11) | Ignore Thread Prev | Next
Author: Aida2003 Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 74759  
Subject: Re: Advise for RothIRA & 401k, please Date: 10/5/2003 7:37 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
To ImCalvin (Ben): Well, I am unfortunate to admit that I didn't get a correct answer when I applied your explained explanation to my I Bonds.
Maybe you could indicate where I'm making a mistake, please... I bought iBonds of $1k at the end of April, 2003. 11/1/2002 fixed rate was 1.6% and the inflation rate was 1.23%. Even if I bought the bond at the end of April, shouldn't I still accumulate interest for 1 month?
My calculation is the following:

1.6%(fixed)+1.23%(inflation)=2.83%/12months=0.235833%
$1,000 * 0.235833% = $2.36 (interest for April)

On May 1,2003 fixed rate was 1.10% and inflation rate was 1.77%.

1.77%+1.1%=2.87%/12 months = 0.239167% * 5months = 1.195833%
$1,000 * 1.195833% = $11.96

So, the total accrued interest would be $2.36+$11.96=$14.32
What mistake did I make? I am sure there is one, because the calculator on the Treasury website says that I've earned as of today only 10 dollars on the iBond.

Also, can someone explain me what's the point to proclaim that iBond's current rate is 4.66% (through Oct 2003) when in fact people earn only 2.87% (1.10%fixed + 1.77% inflation)?
Why do they even bother to show how the composite rates are set (http://www.publicdebt.treas.gov/sav/sbirate2.htm) if they do not pay such an interest on the iBonds anyway?

Aida
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (11) | Ignore Thread Prev | Next

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
2013 Feste Award Voting Begins!
Who will win the 2013 Feste Award? Vote now for the Fool that most exemplifies the Fool Community mission of Learning Together!
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Berkshire Hathaway

Reestablishing the Middle Class
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement