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I have a $50 savings bond from October 1980 that was bought for $25. I entered a bunch of bonds into the Fed's savings bond wizard tool and found that little piece of paper had accrued ~$125 in interest! The rate is listed at %4, yield = %6.66.

Has to be an error in the program, right?

Any explanations on how a bond can get that type of return? Obviously it hasn't made me rich, just a curiosity thing.

I tried finding out the rules on bonds in 1980 but most areas only list the interest rates for bonds after 1982, like here (about halfway down on the page):
http://invest-faq.com/cbc/bonds-us-savings.html
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$25 in 10/1980, $125+ today ... sounds about right for a 6% yield.
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Hit enter too soon ... here it is completed.

$25 in 10/1980, $125+ today ... sounds about right for a 6% yield. That's the miracle of compounding interest.

“The most powerful force in the universe is compound interest” - Albert Einstein
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IIRC - back in the day - you got about 90% of the ?5 year? US Treasury rate - so

YEAR, 5 yr. Rate
__________
1962,- 3.70
1963,- 3.83
1964,- 4.07
1965,- 4.25
1966,- 5.11
1967,- 5.10
1968,- 5.70
1969,- 6.93
1970,- 7.38
1971,- 5.99
1972,- 5.98
1973,- 6.87
1974,- 7.82
1975,- 7.78
1976,- 7.18
1977,- 6.99
1978,- 8.32
1979,- 9.51
1980, 11.45 - Bought the Bond $25
___________ Earned - Value
1981, 14.25 12.8 -- $28
1982, 13.01 11.7 -- $31
1983, 10.79 - 9.7 -- $34
1984, 12.26 11.0 -- $38
1985, 10.12 - 9.1 -- $42
1986,- 7.30 - 6.6 -- $45
1987,- 7.94 - 7.1 -- $48
1988,- 8.48 - 7.6 -- $51 Face value
1989,- 8.50 - 7.7 -- $55
1990,- 8.37 - 7.5 -- $60
1991,- 7.37 - 6.6 -- $64
1992,- 6.19 - 5.6 -- $67
1993,- 5.14 - 4.6 -- $70
1994,- 6.69 - 6.0 -- $74
1995,- 6.38 - 5.7 -- $79
1996,- 6.18 - 5.6 -- $83
1997,- 6.22 - 5.6 -- $88
1998,- 5.15 - 4.6 -- $92
1999,- 5.55 - 5.0 -- $96
2000,- 6.16 - 5.5 - $102
2001,- 4.56 - 4.1 - $106
2002,- 3.82 - 3.4 - $110
2003,- 2.97 - 2.7 - $112
2004,- 3.43 - 3.1 - $116
2005,- 4.05 - 3.6 - $120
2006,- 4.75 - 4.3 - $125
2007,- 4.43 - 4.0 - $130 close????

The wonderful thing is that you purchased the bond at a very nice time. If internediate term got back up to 10% I would first crap a brick cause it means inflation - but second I would back up the truck and buy a boat load!!!!!!!!!!!!
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Thanks. Although I'm sure I've read it several times before I never picked up that the yield compounded.
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