Fundamental Problem With CDs

I must be doing something fundamentally wrong with the way I work with my CDs
in Money 2005, and I'd appreciate some advice.

I opened a one month CD a couple of years ago and I have just let the bank
renew it automatically. When I enter the renewal information from the bank,
Money requires me to "redeem" the CD, then "buy" a new CD. This is
counter-intuitive since the bank uses the same account number. For example, I
have to "redeem" CD Account 123 and "buy" a new CD Account 123 #2. Then a
month later I "redeem" CD Account 123 #2 and "buy" CD Account 123 #3.

Since each is treated as a separate investment, I can't track how the CD has
done over a period of a couple of years. I can't compare how the CD has
performed compared to other investments. When it comes to CDs, it appears
Money 2005 can do nothing but register transactions. That's no better than
the 3-ring binder that I have been using.

Should I be taking a different approach?

Thanks in advance for any suggestions.

via_newsgroup
Sun Jan 02 10:35:39 CST 2005

In microsoft.public.money, Mike Wilkinson wrote:

>I must be doing something fundamentally wrong with the way I work with my CDs
>in Money 2005, and I'd appreciate some advice.
>
>I opened a one month CD a couple of years ago and I have just let the bank
>renew it automatically. When I enter the renewal information from the bank,
>Money requires me to "redeem" the CD, then "buy" a new CD. This is
>counter-intuitive since the bank uses the same account number. For example, I
>have to "redeem" CD Account 123 and "buy" a new CD Account 123 #2. Then a
>month later I "redeem" CD Account 123 #2 and "buy" CD Account 123 #3.
>
>Since each is treated as a separate investment, I can't track how the CD has
>done over a period of a couple of years. I can't compare how the CD has
>performed compared to other investments. When it comes to CDs, it appears
>Money 2005 can do nothing but register transactions. That's no better than
>the 3-ring binder that I have been using.
>
>Should I be taking a different approach?
>
>Thanks in advance for any suggestions.


See
http://groups-beta.google.com/groups?as_q=renew.cd+reinvest.interest&num=50&as_scoring=d&hl=en&btnG=Google+Search&as_epq=&as_oq=&as_eq=as_scoring&as_ugroup=&as_usubject=&as_uauthors=&as_umsgid=&lr=&as_drrb=q&as_qdr=&as_mind=12&as_minm=5&as_miny=1981&as_maxd=2&as_maxm=1&as_maxy=2005&safe=images

Dick
Sun Jan 02 10:42:23 CST 2005

It sound like you are doing this as intended and pretty much have seen how
Money works for CDs, more or less. Money doesn't add a lot of value to the
problem, but then how much could be added? I think you might want to be
looking at it a different way.

Even if you roll it over, it's still multiple different CDs. For this
reason, I'm not sure why you would want to track performance as if it
weren't. The question of "how has this money camped in various CDs performed
over time" seems a lot less relevant than "over the six month life of this
CD, did my money work acceptably well consistent with risk, compared to
other things it could have been doing?" Or, "before I renew, is the rate on
the new CD the best thing I can do with the money for the next six months?"
It really doesn't matter if they offered 10% annualized on the last CD if
they are offering 1% on this one. Banks count on investors not looking at it
this way.

Also, I think you want to think of the CDs as investment vehicles (names
like "6mo 12/04"--you don't have to accept the #n convention) and the
investment account as an account (names like "CD account #234-567").

Hopefully some others will reply--I'd like to see if others think I'm all
wet.

"Mike Wilkinson" <MikeWilkinson@discussions.microsoft.com> wrote in message
news:A1346CAA-4E88-4989-A888-03BECD6A73C6@microsoft.com...
>I must be doing something fundamentally wrong with the way I work with my
>CDs
> in Money 2005, and I'd appreciate some advice.
>
> I opened a one month CD a couple of years ago and I have just let the bank
> renew it automatically. When I enter the renewal information from the
> bank,
> Money requires me to "redeem" the CD, then "buy" a new CD. This is
> counter-intuitive since the bank uses the same account number. For
> example, I
> have to "redeem" CD Account 123 and "buy" a new CD Account 123 #2. Then a
> month later I "redeem" CD Account 123 #2 and "buy" CD Account 123 #3.
>
> Since each is treated as a separate investment, I can't track how the CD
> has
> done over a period of a couple of years. I can't compare how the CD has
> performed compared to other investments. When it comes to CDs, it appears
> Money 2005 can do nothing but register transactions. That's no better than
> the 3-ring binder that I have been using.
>
> Should I be taking a different approach?

No
Sun Jan 02 11:39:51 CST 2005

Just want to add to what Dick wrote. You create an investment account called
Bank XYZ CDs and record your account number on the account. Then you buy CD
1.0% 2005-02-28 in that account. When that CD matures you redeem it and buy
another CD 1.0% 2005-03-31 in the account. If you want to track how your CDs
have done, run the Performance by Investment Account report. This setup
matches exactly what happens in reality. If you don't want to bother with
multiple investments because they only have a life span of 1 month, then
don't bother entering the renewal info. Just buy an investment 1 Month CD
Continuously Renewed in your investment account and record your interest
payments there. Give that CD an estimated maturity date of when you think
this continuous renewal will end. Then you and track and compare the
performance on this continuously renewed CD against your other investments.

"Dick Watson" <littlegreengecko@mind-enufalready-spring.com> wrote in
message news:umt1JpO8EHA.2016@TK2MSFTNGP15.phx.gbl...
> It sound like you are doing this as intended and pretty much have seen how
> Money works for CDs, more or less. Money doesn't add a lot of value to the
> problem, but then how much could be added? I think you might want to be
> looking at it a different way.
>
> Even if you roll it over, it's still multiple different CDs. For this
> reason, I'm not sure why you would want to track performance as if it
> weren't. The question of "how has this money camped in various CDs
performed
> over time" seems a lot less relevant than "over the six month life of this
> CD, did my money work acceptably well consistent with risk, compared to
> other things it could have been doing?" Or, "before I renew, is the rate
on
> the new CD the best thing I can do with the money for the next six
months?"
> It really doesn't matter if they offered 10% annualized on the last CD if
> they are offering 1% on this one. Banks count on investors not looking at
it
> this way.
>
> Also, I think you want to think of the CDs as investment vehicles (names
> like "6mo 12/04"--you don't have to accept the #n convention) and the
> investment account as an account (names like "CD account #234-567").
>
> Hopefully some others will reply--I'd like to see if others think I'm all
> wet.
>
> "Mike Wilkinson" <MikeWilkinson@discussions.microsoft.com> wrote in
message
> news:A1346CAA-4E88-4989-A888-03BECD6A73C6@microsoft.com...
> >I must be doing something fundamentally wrong with the way I work with my
> >CDs
> > in Money 2005, and I'd appreciate some advice.
> >
> > I opened a one month CD a couple of years ago and I have just let the
bank
> > renew it automatically. When I enter the renewal information from the
> > bank,
> > Money requires me to "redeem" the CD, then "buy" a new CD. This is
> > counter-intuitive since the bank uses the same account number. For
> > example, I
> > have to "redeem" CD Account 123 and "buy" a new CD Account 123 #2. Then
a
> > month later I "redeem" CD Account 123 #2 and "buy" CD Account 123 #3.
> >
> > Since each is treated as a separate investment, I can't track how the CD
> > has
> > done over a period of a couple of years. I can't compare how the CD has
> > performed compared to other investments. When it comes to CDs, it
appears
> > Money 2005 can do nothing but register transactions. That's no better
than
> > the 3-ring binder that I have been using.
> >
> > Should I be taking a different approach?
>
>

Richard
Sun Jan 02 11:44:22 CST 2005

Have you considered high-yield savings or money market accounts instead of
CDs? Current interest rates are about the same and you wouldn't have to
deal with redeeming and buying CDs on a month to month basis. It would also
solve your other problem of wanting to track performance.

Richard

"Mike Wilkinson" <MikeWilkinson@discussions.microsoft.com> wrote in message
news:A1346CAA-4E88-4989-A888-03BECD6A73C6@microsoft.com...
>I must be doing something fundamentally wrong with the way I work with my
>CDs
> in Money 2005, and I'd appreciate some advice.
>
> I opened a one month CD a couple of years ago and I have just let the bank
> renew it automatically. When I enter the renewal information from the
> bank,
> Money requires me to "redeem" the CD, then "buy" a new CD. This is
> counter-intuitive since the bank uses the same account number. For
> example, I
> have to "redeem" CD Account 123 and "buy" a new CD Account 123 #2. Then a
> month later I "redeem" CD Account 123 #2 and "buy" CD Account 123 #3.
>
> Since each is treated as a separate investment, I can't track how the CD
> has
> done over a period of a couple of years. I can't compare how the CD has
> performed compared to other investments. When it comes to CDs, it appears
> Money 2005 can do nothing but register transactions. That's no better than
> the 3-ring binder that I have been using.
>
> Should I be taking a different approach?
>
> Thanks in advance for any suggestions.
>



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MikeWilkinson
Sun Jan 02 23:03:02 CST 2005

Thank you all for the quick responses and the variety of suggestions.

To Cal Learner: The messages on the Google Groups gave me a good overview.

To Dick Watson: The CD that I am trying to track is a one month CD, and it
renews automatically if I don't stop it. I use it basically as a savings
account, which only makes sense because savings accounts pay even less than
one month CDs. Since I have let it renew many times, and the interest changes
occasionally, I want to see how it performs on an annual basis so I can
decide if it still makes sense to keep renewing it. If this was a three year
CD or something like that I would evaluate it every time the bank wanted me
to renew it, just like you said. However, I think differently about this one
month CD.

To No Spam: As you guessed, I don't want to create a new investment every
month. So, as you suggested, I have created a CD investment and told Money
that it matures in five years and that interest is paid monthly. (In fact it
is just a one month CD.) Now I will enter the difference in the purchase
price and the maturity price as interest every month. As a test I entered the
info for 2004 that way, and I got an annual return rate, which is what I
wanted.

To Richard Forester: Thanks for the tip about High Yield Savings and Money
Market Accounts. I'll check them out.

Dick
Sun Jan 02 23:07:57 CST 2005

Given the scenario you cite, I get to a solution like No Spam suggested--or,
even simpler, I get to just calling it a savings account with Investment
Income:Interest accruing from time to time. If you don't want to track it a
series of separate investments, why bother even going down the path at all?
I'd rather lie to Money--or simplify the story I told Money--about the whole
thing than create an investment intentionally incorrectly described.

"Mike Wilkinson" <MikeWilkinson@discussions.microsoft.com> wrote in message
news:54626446-85C8-43D7-8DAE-A6BC15FBA95F@microsoft.com...
> Thank you all for the quick responses and the variety of suggestions.
>
> To Cal Learner: The messages on the Google Groups gave me a good overview.
>
> To Dick Watson: The CD that I am trying to track is a one month CD, and it
> renews automatically if I don't stop it. I use it basically as a savings
> account, which only makes sense because savings accounts pay even less
> than
> one month CDs. Since I have let it renew many times, and the interest
> changes
> occasionally, I want to see how it performs on an annual basis so I can
> decide if it still makes sense to keep renewing it. If this was a three
> year
> CD or something like that I would evaluate it every time the bank wanted
> me
> to renew it, just like you said. However, I think differently about this
> one
> month CD.
>
> To No Spam: As you guessed, I don't want to create a new investment every
> month. So, as you suggested, I have created a CD investment and told Money
> that it matures in five years and that interest is paid monthly. (In fact
> it
> is just a one month CD.) Now I will enter the difference in the purchase
> price and the maturity price as interest every month. As a test I entered
> the
> info for 2004 that way, and I got an annual return rate, which is what I
> wanted.
>
> To Richard Forester: Thanks for the tip about High Yield Savings and Money
> Market Accounts. I'll check them out.

No
Sun Jan 02 23:18:22 CST 2005

You don't get a rate of return calculation on a savings account (or do
you?).

"Dick Watson" <littlegreengecko@mind-enufalready-spring.com> wrote in
message news:%23NCaxIV8EHA.2196@TK2MSFTNGP11.phx.gbl...
> Given the scenario you cite, I get to a solution like No Spam
suggested--or,
> even simpler, I get to just calling it a savings account with Investment
> Income:Interest accruing from time to time. If you don't want to track it
a
> series of separate investments, why bother even going down the path at
all?
> I'd rather lie to Money--or simplify the story I told Money--about the
whole
> thing than create an investment intentionally incorrectly described.
>
> "Mike Wilkinson" <MikeWilkinson@discussions.microsoft.com> wrote in
message
> news:54626446-85C8-43D7-8DAE-A6BC15FBA95F@microsoft.com...
> > Thank you all for the quick responses and the variety of suggestions.
> >
> > To Cal Learner: The messages on the Google Groups gave me a good
overview.
> >
> > To Dick Watson: The CD that I am trying to track is a one month CD, and
it
> > renews automatically if I don't stop it. I use it basically as a savings
> > account, which only makes sense because savings accounts pay even less
> > than
> > one month CDs. Since I have let it renew many times, and the interest
> > changes
> > occasionally, I want to see how it performs on an annual basis so I can
> > decide if it still makes sense to keep renewing it. If this was a three
> > year
> > CD or something like that I would evaluate it every time the bank wanted
> > me
> > to renew it, just like you said. However, I think differently about this
> > one
> > month CD.
> >
> > To No Spam: As you guessed, I don't want to create a new investment
every
> > month. So, as you suggested, I have created a CD investment and told
Money
> > that it matures in five years and that interest is paid monthly. (In
fact
> > it
> > is just a one month CD.) Now I will enter the difference in the purchase
> > price and the maturity price as interest every month. As a test I
entered
> > the
> > info for 2004 that way, and I got an annual return rate, which is what I
> > wanted.
> >
> > To Richard Forester: Thanks for the tip about High Yield Savings and
Money
> > Market Accounts. I'll check them out.
>
>

Dick
Mon Jan 03 07:25:36 CST 2005

There's always Excel. (Or, in this case, the statements.)

"No Spam" <nospam@nospam.com> wrote in message
news:yA4Cd.6744$yV1.3573@newssvr14.news.prodigy.com...
> You don't get a rate of return calculation on a savings account (or do
> you?).