Treasury I Bonds

[Dean987]

I am evaluating the software and have not found anything in the software or forum regarding the best way to handle I Bonds. These savings bonds have a fixed rate (set when purchased) and an inflation rate, which is recalculated every May and November. Interest is not paid until maturity or redemption.

More information on I Bonds can be found at:
http://www.treasurydirect.gov/indiv/res ... dterms.htm

I would like to find a way to include these when evaluating the performance of the total porfolio. What is the best way to handle this in Fund Manager?

[Mark]

Hi Dean987,

Fund Manager doesn't have anything special for these type of bonds. The bond support in Fund Manager only has a single "Coupon Rate", which it sounds like is a variable for these bonds. I would suggest recording the purchase, as it happened, and then setting up the bond income properties to pay at maturity, and set the coupon rate to the current fixed rate plus the inflation rate. This coupon rate affects the accrued interest calculation, and scheduled payment calculations. However, at maturity you would simply record the actual interest you received.

[Dean987]

Hi Mark,

Thank you for your quick response. Because the composite rate fluctuates so dramatically, I don't think a single "Coupon Rate" will work....but I believe I found a work-around.

Because I have been keeping track of these in a spreadsheet, I have an updated balance for each period of time (total interest earned plus initial investment). I think by manually updating the price ((initial investment + total interest to date) / initial investment) at each interval, it will accomplish my goal. It's a bit cumbersome, but I will only need to do it twice per year. Do you see any potential problems with handling it this way?

Thank you,

Dean

[Mark]

Hi Dean,

That is perfectly fine. Your performance will properly reflect the accrued interest, since you are updating the market price to reflect this.

[Dean987]

Mark,

I still need to explore Fund Manager a bit more, but so far I am impressed with software and will likely purchase. On top of that, your response time and help on this forum is superb!

Thanks again,

Dean