Interest added to a bond’s principal, typically for zero-coupon bonds.
Description
Accreted interest is the accumulated interest added to the principal of a bond, such as a zero-coupon bond, increasing its value until maturity. Family offices use these bonds in tax-advantaged accounts to defer tax on imputed interest, aligning with long-term income goals. It requires careful tax planning due to annual tax reporting. Accreted interest enhances yield in fixed-income portfolios.
