How to handle I-Bonds interest every 6 months

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Ps56k2
Ps56k2 SuperUser ✭✭✭✭✭
edited June 2023 in Investing (Windows)

I-Bonds are bought via Treasury Direct - and held in your online account.

Was wondering how others might be handling I-Bonds with respect to the interest accrued every 6 months, which is added to the current principal.

ie…. $10,000 I-bond bought on 10/1/22 at 6.48% … currently shows value of $10,320

I guess any other time with an interest generating “item” it’s been the “account” that has the initial balance, and the interest just adds to the account balance. Here, I’ve setup the account with 2 I-Bond securities… which is different than the usual 1-1 interest bearing accounts.

Issue Date:

10-01-2022

Maturity Date:

10-01-2052

Interest Rate:

6.48%

Current Value:

$10,320.00

Comments

  • Jim_Harman
    Jim_Harman SuperUser ✭✭✭✭✭
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    To track an I bond, you can set up an off-line Brokerage type investing account to hold all your I bonds. 

    To do this, go to Tools > Add account. At the bottom, select Offline account then Brokerage and follow the instructions. You can call the account "Treasury Direct" or whatever you like. Do not add any securities to the account. 

    Then go to Tools > Security List and click on Add security to create a Security for the bond. Click on the link at the bottom to enter the name manually. Leave the Ticker Symbol blank and give the bond a descriptive name like IBond 2052-08-31. Set the Security type to Other. The Bond type is for negotiable bonds, which does not apply to I bonds. In the Security list, un-check the Download quotes box.

    Usually people defer I bond interest until they redeem the bond. The bond's value is increasing year by year and thus should be reflected in your net worth, but the increase should not show as taxable income.  

    In this case, go to the account you created and enter a Buy (not Bonds bought) for one “share” at the amount you paid for the bond. If you receive the bond as a gift, you would enter an Add instead.

    As interest accrues and the I bond’s value increases over the years, you can increase the bond's "share" price to match its current value. Then when you redeem the bond, you would lower its price back to the purchase price and record an Int payment for the total interest, then record the sale. That should make Quicken's net worth and tax calculations correct.

    If you choose to pay taxes as you go, you would buy as many shares of the security you created as the amount you paid for the bond at a price of $1.00. When the bond pays interest, you record it as a ReinvInt transaction.


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  • retird
    retird Member ✭✭✭✭
    edited May 2023
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    Here is an example of my setup….. (I changed the initial cash balance and the purchase price of the bond.) I hate that you have to calculate the interest each time you post as the Treasury Direct does not (that I can find)say how much interest is earned from one period to the next. The total just increases each time interest is given…. The date of posting to quicken is the date I looked at Treasury Direct.

    Windows 11 (2 separate computers)..... Quicken Premier.. HAVE USED QUICKEN CONTINUOUSLY SINCE 1985.

  • Ps56k2
    Ps56k2 SuperUser ✭✭✭✭✭
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    I have them already setup as the usual offline account.
    Just not sure how to handle the interest going forward….

    I think I'll set a Reminder for each month to go check on the Treasury Direct website to see if the interest info has changed,
    or if it only gets updated and added every 6 months…. not counting the 3 month exclusion period.

  • GeoffG
    GeoffG SuperUser ✭✭✭✭✭
    edited May 2023
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    A little known or perhaps easily forgotten shortcut is the Memorized Investment List. As these bonds are a bear to keep track of, memorizing the interest makes it pretty easy to enter.

    Just need to calculate the TD market balance less the Quicken balance whenever I want to record interest.

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