Not quite a year ago, my wife and I started investing in Series I Savings bonds. For those that are unaware, “I Bonds” are low risk, inflation-indexed savings bonds issued by the Federal government.
Unlike CD rates, which are fixed, I Bond rates are adjusted for inflation on a semi-annual basis in May and November. When it comes to buying I Bonds, you have two options… You can purchase them online using TreasuryDirect or by visiting your local bank.
The primary limitation with I Bonds is that you can only purchase $10k worth of them ($5k electronic and $5k in paper form) per calendar year per social security number. Anyway… My wife and I both bought our annual allotment last year, which meant that I needed to start tracking them in Quicken.
While Intuit provides some guidance on how to do this, I ultimately ended up adapting my CD tracking strategy to track our I Bonds. I started by creating a new “brokerage” account, which I named “US Treasury.”
From there, I created a new security for each of the bonds that we purchased and gave them descriptive names, like this:
Where “ABC” and “DEF” were replaced with my and my wife’s initials. The date in the middle incicates when we bought them, and the letter at the end indicates the format (E = electronic, P = paper).
I then entered “buy” transactions for each of these by purchasing the appropriate dollar amount at $1.00/share. So, for example, a $5000 savings bond would be recorded as 5000 shares @ $1/each.
Since you get credited for the full first month of ownership no matter when during the month you purchase them, and since we bought all four of them during the same month, I recorded the transaction date as April 1, 2010 for all four bonds.
Now, how do we check and record the interest earned? For starters, you can check the value of your bond by visiting the following website: link. You’ll need to enter your bond type, denomination, serial number, and issue date.
The interest earned is simply the difference between the present value and the original (or previous) value. Because the interest is accrued within the bond, I simply treat the change in value as a dividend reinvestment (transaction type “RD”).
While there are other approaches out there, this works flawlessly, and allows you to track an unlimited number of bonds within a single Quicken account. At a minimum, I’ll be checking and updating the value of our bonds once per year – in January.