Hi everyone,
I’ve been using Portfolio Performance for a while now and feel very comfortable with how it handles equities (stocks), but after reading through the forum, I still find myself unsure of how to model fixed income, specifically Certificates of Deposit
From what I understand, handling fixed-rate CDs seems relatively easy. Since the return is known in advance i can define a price development over time. However, I don’t know exactlhow to deal with floating rates on CDs where returns are not known upfront and evolve over time.
In these cases, is the expected approach to manually update the accrued interest periodically by adjusting the asset price? I have a lot of these and have not yet create them in PP because of that.
I’m between:
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Using a Security:
Creating the CD as a security and manually updating its price over time. it does seem to provide better performance tracking and integration with the portfolio view. However, it requires ongoing maintenance and external calculation of returns, which feels wonky. -
Using a Balance Account:
Alternatively, treating the investment as a balance account might simplify things operationally because my goal to just reflect capital growth. But this seems to lose analytical depth, such as performance attribution and comparability with other asset classes, which should be possible…
With that said, my main questions are:
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Is manual price updating the intended way to handle interest for fixed income?
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Do you recommend modeling CDs as securities or as balance accounts?
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Are there any established workflows or conventions that strike a good balance between accuracy and manual workload?
Thanks in advance for any guidance!
Love the app! God bless