I have a fixed deposit to track in KMyMoney. There are two options I am thinking of:
Track as Checking account, where the principal entry on the deposit date, and another entry on the date of maturity with final settlement amount.
Track as Investment, where firs entry of Buy Investment on the date of purchase, second entry of SELL with interest on the date of settlement.
Which method is better? I would like to know the current value of the investment, although payment is cumulative on the date of settlement.
As I’ve said in other threads, in KMyMoney there is often more than one way to do something, and the best way is the way you are most comfortable with, and which gives you the displays and reports you need/want.
The actual net present value of this deposit depends on what you would get if you withdrew before the full term. This clearly depends on the rules of the bank. Generally, for such deposits, an early withdrawal has some sort of penalty, which can range from only getting back your original deposit, to only getting some percent of the pro-rated interest.
Using a plain asset account (I might consider a savings rather than checking account. but that is clearly a personal preference) is certainly simpler, and you could either add the interest as a deposit at maturity, or transfer the balance to another account, with an additional split to represent the interest. To track actual value, you could also add interest on a monthly or quarterly basis.
Using an Investment account, you would need to create an equity/security. You have the choice of using a value of $1 per share, and using Add Shares for the interest, whether monthly, quarterly, or only at maturity; or use 1 share and adjust the value of that share instead of adding shares. In addition, you could have an actual interest payment at maturity, and then sell at the original price. Tracking actual present value would require regular adjustments instead of adjusting the value with the final transaction. Another possibility is to use “reinvest dividend” transactions, to increase the value, but track those increases with an appropriate category for tax reporting later.
It all really depends on how you want things to look before maturity, and how you want the history to look later, which can affect your tax reporting.