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How to enter bonds with fixed maturity dates

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Last Post by Stuart Matthews 3 years ago

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Jonathan Kandell

(@jkandell)

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Topic starter January 2, 2023 11:56 am

As a hack I entered these as windfall income in specific years. Is there a better way?

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Bill Hines, Advice-Only Flat-F...

(@hines202)

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January 5, 2023 6:29 am

Well, the money invested in the bonds is still an asset, so if you put the interest income under the income tab, make sure to account for the basis in your financial assets.

But, when you "buy" a bond, you are essentially loaning money. So maybe Financial Assets->Personal Loans is a better place. It will accomplish both goals - keeping the asset as well as accounting for the interest income.

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Jonathan Kandell

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Topic starter January 29, 2023 5:00 pm

Posted by: @hines202

↑

when you "buy" a bond, you are essentially loaning money. So maybe Financial Assets->Personal Loans is a better place. It will accomplish both goals - keeping the asset as well as accounting for the interest income.

I tried listing a sample CD as a "personal loan" as you suggested ("Personal Loan" tab). There is only space for two such loans though, so that won't work for a portfolio with a lot of bonds/cds etc. Also, it only works for CDs or bonds paying annual interest, not for say ibonds where you pay tax at the end when you receive all the interest. I tried the "investment loan" section, with negative interest, but that didn't seem quite right either.

So I think my best bet is my original suggestion of listing all my bonds and CDs as windfall incomes in the years they mature, and then remembering to not include these in my other assets. I can't adjust taxation here (e.g. treasuries versus CDs and commercial bonds) and can only list 10. But it may be my best bet. I am not sure how Pralana will know to tax these correctly when they mature, though. There is room for 5 "income streams" X2 that allows tailoring of taxation, and each could perhaps be used for a single bond or a number of them--but I'd need to manually calculate each year's interest payment (since the entry requires a set amount, not a percentage).

I admit I'm puzzled that Pralana isn't geared for "liability matching" of this nature. One of the reasons I purchased the program is the way it could get into the weeds rather than just vague income streams. But I may be in the minority for covering my essential expenses with fixed income instruments rather than funds. After last year's 152 year record drop in aggregate bond market, I'm not willing to risk essential expenses with a bond fund.

This post was modified 4 years ago 3 times by Jonathan Kandell

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(@nc-cpl)

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February 5, 2023 11:37 am

@jkandell we own some I bonds as well so curious if there's a final solution to this question.

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Jonathan Kandell

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Topic starter February 14, 2023 4:19 pm

One solution might be addition of a screen similar to misc expenses but for income.

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Jonathan Kandell

(@jkandell)

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Topic starter February 14, 2023 4:19 pm

One solution might be addition of a screen similar to misc expenses but for income.

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William CROCKER

(@billycee1958)

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November 11, 2023 8:10 pm

Hi, I'm posting a follow up to the original question. I own Ibonds maturing in 7-8 years with a substantial increase in value (over $250,000). I plan to redeem these over a period of years to smooth the tax impact of the interest income. What is the best way to list these bonds and the interest in Pralana? I'm planning to show the original bond value as an asset and the interest accrual as income in the year of maturity- is this the right approach???

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Stuart Matthews

(@smatthews51)

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November 12, 2023 8:21 am

@billycee1958 I think this is probably the best way to model it in the current design. Just make sure you don't double dip on the interest. We have an enhancement for modeling individual bonds on the to-do list but it will not be available in the near term.

Stuart

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