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Classify CDs as Bonds?

Rocket J Squirrel

I recently extended my CD/Bond ladder out a few years to take advantage of current high yields. I tend to think of all the "rungs" in the ladder as being the same whether they're bonds or CDs. I buy whatever looks good at the time that has the maturity I seek.

My recent purchases were all FDIC-insured CDs because they are actually paying more right now than corporate bonds of similar maturities.

Looking at my asset allocation, it looks too high in "Cash" because of the CDs. I do have plenty of liquid cash in money market funds and bank deposits. It occurred to me today that I could assign the Asset Class "Domestic Bonds" to my CDs while retaining their "Type" as CD. This makes my allocation look more like what I want it to be even though it's technically wrong. It's my data and I can do what I like with it, but is there any technical reason not to do this?

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q_lurker

It's my data and I can do what I like with it, but is there any technical reason not to do this?

Not that I can think of. My limited use of CDs has been to use the Asset Class of Cash, but I can see the sense of calling them Bonds. The accountants among us might make the distinction based on maturity date and liquidity, I suppose.

Gary Virshup

Is there a way to track maturity dates of CD's or Bonds with Quicken that I havent been able to uncover?

Rocket J Squirrel

The accountants among us might make the distinction based on maturity date and liquidity, I suppose.

We have accountants among us?

MontanaKarl

I treat CD's as bonds of bond type "Other Bond Type". Entered into Quicken as Buy Bond / Sell Bond.

Cost basis and "sale" at maturity identical of course. Removes the cash from investing account.

(Wish Quicken (both Win and Mac) had a concept of 'maturity' for bonds, t-bills, etc and automatically hid the security after the maturity date. But that's another story.)

PS. I use asset class Domestic Bond vs cash because the market value of a CD, just like any bond, t-bill, etc, varies from issue date through to maturity. If bought at issue and held to maturity, then both are face value.

q_lurker

https://community.quicken.com/discussion/comment/20352312#Comment_20352312

@Gary Virshup When you identify the Security Type for a security as a Bond, then you can assign a Maturity Date and similar to that specific security.

With that data established, a portfolio view can be customized to include a Maturity Date column. There is also a Report available specific to Bond Maturities.

Assigning type as CD does not offer that maturity tracking.

Rocket J Squirrel

https://community.quicken.com/discussion/comment/20352324#Comment_20352324

Not true. CDs allow maturity tracking and appear in the Maturity Dates report.

q_lurker

Thanks for the correction. Once again my fingers started typing before my brain requested a fact-check.

Boatnmaniac

https://community.quicken.com/discussion/comment/20352312#Comment_20352312

Go to Reports > Investing > Maturity Dates for Bonds and CDs.

Boatnmaniac

I normally don't invest in CDs because historically they have had poor returns. But for the last year I've been investing a fair amount into 3-month CDs. I haven't invested further out than this because I knew that there would be a really good chance that the Fed would raise interest rates which would push up returns on CDs and I didn't want to lock in my money for too long and then miss out of the higher opportunities. So far that has panned out pretty well.

My market traded CDs get downloaded from Fidelity as follows and I don't change these:

Type = Bond
Bond Type = Other Bond Type

Keeping them this way then allows for showing both the Maturity Date and the Call Date (which is really the purchase date).

The Asset Class is the only thing I change in Security Details: I had set up "CDs" as a custom Asset Class and I use that. By doing it this way the Allocations screen on the Investing tab will show the allocation for percentage for CDs which I find to be quite helpful.