Bond coupon schedule: when the money arrives
A bond does not pay every day but on a schedule: a coupon once or twice a year and the face value at maturity. Here is how to work out each payment, where the dates come from and how not to miss money when you hold several bonds.
On this page
In short
Coupon = face value × annual coupon rate ÷ payments per year. For 10 bonds with a face value of 1,000 and a 4% coupon, that is 200 every six months, and 10,000 of face value on the maturity date. The money lands in the account where the bonds are held and is not reinvested by itself.
How a coupon is calculated
The coupon rate is fixed for each bond and stated in its terms. It is a yearly rate on the face value, not on the price you paid. If the bond pays twice a year, each payment is half the annual rate.
Coupon per bond = 1,000 × 4% ÷ 2 = 20
Whether coupons are taxed, and how, depends on where you live and on the bond. Many countries withhold tax at payment; check the rules that apply to you. The example below is before tax.
On the maturity date the last coupon and the face value arrive together. The bond is then repaid, and the money has to be invested again to keep earning. Short-term zero-coupon bills pay no coupons: they are bought below face value and pay the difference at maturity.
Example: 10 bonds over two years
Bought on 11/2/2026, maturing on 11/15/2028, 4% coupon paid twice a year. Over the whole term you receive 1,000 in coupons and 10,000 of face value.
Each bar is the coupons received up to that date. The face value returns on the last date and is left out of the chart so it does not hide the coupons. The schedule is counted the same way as in a bond account in Monsave: back from the maturity date in steps of six months. Check exact payment dates in the bond terms.
Why the first coupon is almost full after only two weeks
In the example the first coupon arrives 13 days after the purchase. The coupon goes to whoever holds the bond on the payment date, but the previous owner has already earned their share of it. That is why the purchase price includes accrued interest: you pay the seller the coupon for the days the bond was theirs.
Accrued interest ≈ coupon × days since the last payment ÷ days in the coupon period
So the first payment mostly gives back that accrued interest rather than being profit. When comparing bonds, look at the yield to maturity your broker shows, not at the size of the next coupon.
Try it with your numbers
Change any value and the result updates straight away. Nothing is saved.
The coupon rate and inflation are examples, change them to yours. The calculator does not include reinvesting coupons.
How to build your own schedule
- Write down for each bond its identifier (ISIN), quantity, coupon rate, payment frequency and maturity date. Your broker or bank shows all of them.
- Work out one coupon with the formula above and multiply it by the number of bonds.
- Set the payment dates: back from the maturity date in steps of the coupon period. Check exact dates in the bond terms.
- Put all bonds in one table by date. You see the months when money arrives together and the months without payments.
- Decide in advance what each payment is for: reinvesting, a planned expense or your reserve.
Coupons are not reinvested by themselves. If the money sits in the account for a month or two, the real return is lower than calculated, especially with several bonds paying at different times of the year.
Schedule and reminders in Monsave
Create an account of the Bond type and enter the quantity, coupon rate, payment frequency and maturity date. Monsave builds the coupon and redemption schedule with the same rule as in the example.
You get a reminder on the day of every coupon, and for the redemption also 3 days before. A payment can be recorded in your books right away, and the account details show what you have received and what is still to come.
With several bonds, the accounts page shows the next payment under the bonds group, so there is no separate table to maintain.
Add your bonds and the reminders come by themselves
Free. The coupon schedule is built from the rate, frequency and maturity date.
Sources
This material is for information only and is not investment, tax or legal advice. Bond terms and taxes change: check the terms of the bond and the rules of your country before deciding.