When you purchase the interest bearing investment, you must create an asset account to record the purchase of the investment, an income account to record earnings from interest, and an expense account to record bank charges. Below is an account layout example, in which you have an interest bearing savings account and a certificate of deposit at your bank.

Assets
   Bank ABC
      Certificate of Deposit
      Savings
Expenses
   Bank ABC
      Charges
Income
   Interest Income
      Certificate of Deposit
      Savings

As usual, this account hierarchy is simply presented as an example, you should create your accounts in a form which best matches your actual situation.

Now let’s populate these accounts with real numbers. Let’s assume that you start with $10,000 in your bank account, which pays 1% interest and you buy a $5,000 certificate of deposit with a 6 month maturity date and a 2% yield. Clearly, it is much better to keep your money in the certificate of deposit than in the savings account. After the initial purchase, your accounts should look something like this:

Figure 9.2. The Chart Of Accounts After Investing In A Certificate Of Deposit

This is an image of the account register after creating and investing in a certificate of deposit investment.

Now, during the course of the next 6 months, you receive monthly bank statements which describe the activity of your account. In our fictional example, we do nothing with the money at this bank, so the only activity is income from interest and bank charges. The monthly bank charges are $2. After 6 months, the register window for the certificate of deposit and for the savings account should look like these:

Figure 9.3. The CD Account After 6 Months

This is an image of the register of the certificate of deposit account after 6 months.

Figure 9.4. The Savings Account After 6 Months

This is an image of the register of the Savings account after 6 months.

And this is the main GnuCash account window:

Figure 9.5. The Chart Of Accounts After 6 months

This a screen capture of the accounts after 6 months.

From the above image of the main GnuCash account window you see a nice summary of what happened to these investments over the 6 months. While the yield on the certificate of deposit is double that of the savings account, the return on the certificate of deposit was $50.21 versus $13.03 for the savings account, or almost 4 times more. Why? Because of the pesky $2 bank charges that hit the savings account (which counted for $12 over 6 months).

After this 6 month period, the certificate of deposit has reached maturity which means you may sell it with no early withdrawal penalty. To do so, simply transfer the $5,050.21 from the certificate of deposit account into the savings account.