How Much is a $25 War Bond Worth?
What is a War Bond?
Before we dive into the answer to the question, it’s essential to understand what a war bond is. A war bond is a type of savings bond that was issued by the US government during World War I and World War II to finance the war efforts. These bonds were sold to the public through a national campaign, with the slogan "Loans to Victory" or "Victory Bonds" becoming synonymous with the effort.
Original Face Value
A $25 war bond, purchased during the time of the war, would have yielded a face value of, well, $25. This is the original purchase price of the bond. However, this is just the beginning of the story.
Face Value and Interest
Here’s the exciting part: the war bonds were designed to pay interest over time. The interest rates varied depending on the war bond series, but typically ranged from 2.9% to 4.3% per annum. The interest was compounded semi-annually, meaning it was added to the principal amount of the bond every six months.
Face Value Increase
Fast forward to the present day. The war bonds have been redeemed or matured over the years, but some still exist. So, how much is a $25 war bond worth now? Let’s do some math.
Interest Calculation
To calculate the face value of a $25 war bond, we need to calculate the total interest earned over time. Here’s a simple example:
| Year | Interest Rate | Interest Earned | Principal + Interest |
|---|---|---|---|
| 1 | 3.1% | $0.77 | $25.77 |
| 5 | 3.2% | $6.44 | $32.21 |
| 10 | 3.5% | $13.29 | $45.50 |
| 20 | 4.0% | $25.41 | $70.91 |
As you can see, the interest earned over time is substantial. The total interest earned would be the difference between the face value of the bond and its original purchase price.
Face Value in Today’s Dollars
But here’s the thing: the purchasing power of $25 in the 1940s or 1950s is not the same as $25 today. Inflation has eroded the value of money over time.
Inflation Adjustment
To adjust for inflation, we can use the Bureau of Labor Statistics’ Consumer Price Index (CPI) inflation calculator. As of 2022, $25 in 1945 has the same purchasing power as approximately $345.
Present-Day Value
Now, let’s add the total interest earned to the face value of the bond. Using the previous example, the total value of the $25 war bond would be:
- Original Face Value: $25
- Total Interest Earned: $70.91
- Present-Day Value: $95.91
So, How Much is a $25 War Bond Worth?
In conclusion, a $25 war bond purchased during World War II or the Korean War could be worth $95.91 or more, depending on the series and the interest rate. This represents a return of approximately 384% over the original purchase price.
Table: Present-Day Value of $25 War Bonds
| Face Value | Interest Rate | Total Interest Earned | Present-Day Value |
|---|---|---|---|
| $25 | 3.1% | $70.91 | $95.91 |
| $25 | 3.2% | $68.55 | $93.55 |
| $25 | 3.5% | $63.92 | $88.92 |
| $25 | 4.0% | $59.34 | $84.34 |
Conclusion
War bonds were an innovative way for the US government to finance its war efforts and encourage individual citizens to participate in the war effort. While the original face value of the bond may have been $25, the total value of the bond today can be significantly higher due to the power of compound interest and inflation. If you have a $25 war bond in your possession, it’s likely worth more than you initially paid for it.
