Investment account usage

[Eric Werme]

I've have trouble getting my head around investment accounts in both
Quicken and MoneyDance. I think I'm making progress, though. While
I don't like some of my understanding, I can see where it addresses
problems with my old understanding. If the following makes sense,
I'll add it to the Wiki. If I'm not making sense, please set me
straight.

----

An investment account consists of three key sections:

1) The account itself which holds:
1a) A cash account that may not really exist.
1b) One or more securities that represent shares of stock or other valuable.

This models brokerage accounts well. You have a cash account that you
put money in and use to buy stocks. Proceeds from sales goes back into
the cash account and you can transfer money between there and your checking
account at your bank.

The investment account is cash-centric. The Register page shows a
running account of the cash available, the Portfolio View and Securities
Detail pages show the number of shares owned, but not running total.

Investment accounts are also used to track mutual funds. You can
group several funds into one account or keep each separate.
Mutual Fund transactions are generally purchases paid for by check
from a checking account or sales with proceeds remitted by a check
to you. The cash account isn't really necessary, and could be kept
at $0.00 for the life of the account. However, you may want to use
it to keep transaction dates straight. Suppose you write a check
to buy shares in a fund. If you make that be a transfer to the cash
account, you can track the date you wrote on the check. When the
fund acknowledges the transaction, then you can enter a Buy Shares
transaction in the investment account and track the date the fund
used. In this scenario, the cash account isn't really a "pile of
money," it's more like a log of transfers of money as checks
make it through the mail and securities system.

The cash-centric nature of Investment Accounts makes sense with
double entry accounting systems like Moneydance. Unfortunately,
in situtations like mutual funds, tracking the balance in the
cash account isn't all that interesting. Tracking the number of
shares of the fund is interesting, but it's not tracked.

-----

I mentioned in my previous mail that I'm not really ready to start
making change requests, so I'll just note that an extension to report
the running totals of shares held seems like a worthwhile thing to write.

-Ric Werme

[Mike Bailey]

What do you mean the number of shares is not tracked? MoneyDance
certainly track the number of shares in my mutual funds as well as
their cost, current value and when they were purchased. When you
purchase a Mutual Fund you write a check to the broker or Mutual fund
company and that check amount shows up in the cash balance for the
mutual fund investment account. When the broker actually purchases
the mutual fund shares you receive a statement of how many shares
were purchased and the price per share. At that time you go into the
Mutual Fund Investment Register and enter a "Buy Shares" transaction
that effectively zeros out the cash balance in the account, records
the number of shares purchased, the cost per share, and any
transaction fees. I don't know how else you could do it since you
never know for sure how many shares you are purchasing when you send
a check to the mutual fund broker. In this scenario there will be a
temporary cash balance in the Mutual Fund Investment account, but it
is only temporary and when your transaction settles will go back to
the proper zero balance.

Selling Mutual fund shares is essentially the reverse of this process.

Quite honestly, I don't really know how else it could be done unless
you are using direct funds transfers between your bank and mutual
fund. In that case the "Transfer and Buy Shares" and "Transfer and
Sell Shares" transaction types will work and there is never a cash
balance in the mutual fund account.

Post by Eric Werme
The cash-centric nature of Investment Accounts makes sense with
double entry accounting systems like Moneydance. Unfortunately,
in situtations like mutual funds, tracking the balance in the
cash account isn't all that interesting. Tracking the number of
shares of the fund is interesting, but it's not tracked.

[Ric Werme]

Post by Mike Bailey
What do you mean the number of shares is not tracked? MoneyDance
certainly track the number of shares in my mutual funds as well as
their cost, current value and when they were purchased.

Sorry, a poor choice of words on my part. I should have said "running total"
or something like that. Suppose own stock in symbol FOO, and bought lots
in sizes 400, 100, and 200. The investment account happily lists that,
but the only time I saw a balance of 500 was between the time I bought the
100 share lot and the 200 share lot. If I look at the Securities detail
page, the register shows each transaction and the summary on the right shows
the current share balance of 700, the "current" price, value, etc.
The portfolio view shows a subset of that summary.

If I've been lax in updating things like the monthly dividends in a money
market or bond mutual fund and make an error in entering the updates, then
I see the number of shares from the fund don't match the share total in
Moneydance.

What I want is to see the running share balance in Moneydance, just like
the statements from the investment company and just like the cash balance
that Moneydance displays on banking and investment accounts. For example,
wouldn't it be cute that if you're looking at the Register page and click
on the column heading "Account" to sort things by security name, then see
the _share balance_ in the Balance column rather than the cash balance?
Is there a use for the cash balance when things are sorted thusly? I
don't know of one, but I'd like to hear of any.

When you

Post by Mike Bailey
purchase a Mutual Fund you write a check to the broker or Mutual fund
company and that check amount shows up in the cash balance for the
mutual fund investment account. When the broker actually purchases
the mutual fund shares you receive a statement of how many shares
were purchased and the price per share. At that time you go into the
Mutual Fund Investment Register and enter a "Buy Shares" transaction
that effectively zeros out the cash balance in the account, records
the number of shares purchased, the cost per share, and any
transaction fees.

Pronoun issue - please use "I". I think what I did was to write a check
to purchase $x,000.00 of a fund, but not enter it in Quicken until the
acknowledgment came back from Vanguard. Then I'd make a single "BuyX"
entry in the mutual fund account and make the checking account be the
other account. That way I'd know the #shares, $/share, etc. and the
checking account would just be dollars so it wouldn't care. Why make
what appears to be a single transaction be multiple steps, especially when
the Vanguard statement never lists a cash account?

I don't know how else you could do it since you

Post by Mike Bailey
never know for sure how many shares you are purchasing when you send
a check to the mutual fund broker. In this scenario there will be a
temporary cash balance in the Mutual Fund Investment account, but it
is only temporary and when your transaction settles will go back to
the proper zero balance.

And Moneydance happily reports 0.00 in the balance column with momentary
non-0.00 blips that match numbers in other columns. Waste of screen real
estate. I'd rather see the # of shares history in the balance column.

-Ric Werme

[Ken Ganshirt]

...[snip]...
If I've been lax in updating things like the monthly dividends in a
money market or bond mutual fund and make an error in entering the
updates, then I see the number of shares from the fund don't match the
share total in Moneydance.

Your problem .. the direct consequence of your laxness .. at least until
someone invents personal financial management software with ESP. :)

What I want is to see the running share balance in Moneydance, ...
... wouldn't it be cute that if you're looking at the Register page
and click on the column heading "Account" to sort things by security
name, then see the _share balance_ in the Balance column rather than
the cash balance?

Not really. What do you find interesting about it? What value or use does
that knowledge represent for you?

Is there a use for the cash balance when things are sorted thusly? I
don't know of one, but I'd like to hear of any.

It's not a "cash balance". It's more correct to call it "current value" ..
"current" as of the last time you got around to updating the share/unit
price.

That suits me just fine.

In my particular case, I have no interest in the number of shares or units
I own in anything -- an equity, an income trust or a mutual fund. That bit
of knowledge holds no value or use for me. I only care about what their
value is to me at the present time .. how much money in my pocket does it
represent, if I should decide to sell.

It's also of some minor interest to know whether it's worth more now - in
the aggregate - than when I bought.

Pronoun issue - please use "I". I think what I did was to write a check
to purchase $x,000.00 of a fund, but not enter it in Quicken until the
acknowledgment came back from Vanguard. Then I'd make a single "BuyX"
entry in the mutual fund account and make the checking account be the
other account. That way I'd know the #shares, $/share, etc. and the
checking account would just be dollars so it wouldn't care. Why make
what appears to be a single transaction be multiple steps, especially
when the Vanguard statement never lists a cash account?

It all depends upon how you choose view it. You choose to view it in those
simple terms to save yourself transaction entries. I'm sure others do,
too. Perhaps it also reflects the details -- or lack of them -- in the
reports from your mutual fund(s).

I think Mike's description is a more accurate representation of what
actually occurs in the mutual fund account. At least that's the way it
shows up in *my* mutual fund accounts. I always see the cash go in, then
the buy transaction taking the cash amount to zero. If I sell, the sell
transaction takes the number of shares to zero and adds cash to the
balance. Then the cash balance goes to zero when the money is actually
paid to me.

It looks pretty much like my brokerage account report. Your reports may be
different. Or you may simply prefer to keep things simple.

Regardless of how detailed the mutual fund reports may be, I, personally,
think it's simpler if I can see the mechanics of the transactions. That
is, it's simpler for me to relate to, if/when I have occasion to review
the transaction history for some reason. But that's the way my
left-dominated brain works.

And Moneydance happily reports 0.00 in the balance column with momentary
non-0.00 blips that match numbers in other columns. Waste of screen
real estate. I'd rather see the # of shares history in the balance
column.

I have no interest in it but I certainly have no objection if it's
implemented as an optional view. Send an email to support-***@public.gmane.org
and request an enhancement. Or submit it directly to the wiki. The
developers try to follow this discussion but they can't always do that.
They monitor the support email address religiously.

...ken...

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[Martin & Carol]

What I want is to see the running share balance in Moneydance, ...

... wouldn't it be cute that if you're looking at the Register page
and click on the column heading "Account" to sort things by security
name, then see the _share balance_ in the Balance column rather than
the cash balance?

Not really. What do you find interesting about it? What value or use does
that knowledge represent for you?

Is there a use for the cash balance when things are sorted thusly? I
don't know of one, but I'd like to hear of any.

It's not a "cash balance". It's more correct to call it "current value" ..
"current" as of the last time you got around to updating the share/unit
price.
That suits me just fine.
In my particular case, I have no interest in the number of shares or units
I own in anything -- an equity, an income trust or a mutual fund. That bit
of knowledge holds no value or use for me. I only care about what their
value is to me at the present time .. how much money in my pocket does it
represent, if I should decide to sell.
It's also of some minor interest to know whether it's worth more now - in
the aggregate - than when I bought.

For some of us the use of a Financial program is mostly to verify that all
the account statements we receive are correct and to have a tax record. If
we can not verify that the number of shares are correct then we have lost an
important tool. That's because MD doesn't allow us to select the date for
which the worth of the account is displayed. If we could set that date to
the statement date then we could verify our MD worth with that on the
account statement.

Martin Alper

[Jon Walthour]

Martin:

Being able to set the date to compare the value of a stock or mutual
fund really isn't necessary because you don't want to reconcile the
value, but the transactions. However, you do raise a good point on
this issue that I have seen missing in MD. With mutual fund accounts,
the reconciliation isn't so much on the register of the cash account
as that will usually be zero if all your contributions are invested
in a timely fashion. What one should be able to reconcile are the
share transactions--to determine that the number of shares you say
you have matches with what your broker says you have. Martin, that, I
think, would solve your problem more precisely.

Post by Martin & Carol

What I want is to see the running share balance in Moneydance, ...

... wouldn't it be cute that if you're looking at the Register page
and click on the column heading "Account" to sort things by security
name, then see the _share balance_ in the Balance column rather than
the cash balance?

Not really. What do you find interesting about it? What value or use does
that knowledge represent for you?

Is there a use for the cash balance when things are sorted
thusly? I
don't know of one, but I'd like to hear of any.

It's not a "cash balance". It's more correct to call it "current value" ..
"current" as of the last time you got around to updating the share/
unit
price.
That suits me just fine.
In my particular case, I have no interest in the number of shares or units
I own in anything -- an equity, an income trust or a mutual fund. That bit
of knowledge holds no value or use for me. I only care about what their
value is to me at the present time .. how much money in my pocket does it
represent, if I should decide to sell.
It's also of some minor interest to know whether it's worth more now - in
the aggregate - than when I bought.

For some of us the use of a Financial program is mostly to verify that all
the account statements we receive are correct and to have a tax record. If
we can not verify that the number of shares are correct then we have lost an
important tool. That's because MD doesn't allow us to select the date for
which the worth of the account is displayed. If we could set that date to
the statement date then we could verify our MD worth with that on the
account statement.
Martin Alper
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http://moneydance.com/mailman/listinfo/moneydance-info

[Martin & Carol]

That would indeed be a big help, but...If you have selected an investment
account, in MD, the page will display all the securities in that account
with the number of shares for each, the share price, the "current Value" of
that particular security, the portfolio value, the cash valueof the account
and the total value. What I am asking for is that by selecting a date all
those values would agree with the statement that was mailed to you.

Martin Alper

Post by Jon Walthour
Being able to set the date to compare the value of a stock or mutual
fund really isn't necessary because you don't want to reconcile the
value, but the transactions. However, you do raise a good point on
this issue that I have seen missing in MD. With mutual fund accounts,
the reconciliation isn't so much on the register of the cash account
as that will usually be zero if all your contributions are invested
in a timely fashion. What one should be able to reconcile are the
share transactions--to determine that the number of shares you say
you have matches with what your broker says you have. Martin, that, I
think, would solve your problem more precisely.

Post by Martin & Carol

What I want is to see the running share balance in Moneydance, ...

... wouldn't it be cute that if you're looking at the Register page
and click on the column heading "Account" to sort things by security
name, then see the _share balance_ in the Balance column rather than
the cash balance?

Not really. What do you find interesting about it? What value or use does
that knowledge represent for you?

Is there a use for the cash balance when things are sorted
thusly? I
don't know of one, but I'd like to hear of any.

It's not a "cash balance". It's more correct to call it "current value" ..
"current" as of the last time you got around to updating the share/
unit
price.
That suits me just fine.
In my particular case, I have no interest in the number of shares or units
I own in anything -- an equity, an income trust or a mutual fund. That bit
of knowledge holds no value or use for me. I only care about what their
value is to me at the present time .. how much money in my pocket does it
represent, if I should decide to sell.
It's also of some minor interest to know whether it's worth more now - in
the aggregate - than when I bought.

For some of us the use of a Financial program is mostly to verify that all
the account statements we receive are correct and to have a tax record. If
we can not verify that the number of shares are correct then we have lost an
important tool. That's because MD doesn't allow us to select the date for
which the worth of the account is displayed. If we could set that date to
the statement date then we could verify our MD worth with that on the
account statement.
Martin Alper
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http://moneydance.com/mailman/listinfo/moneydance-info

_______________________________________________
moneydance-info mailing list
http://moneydance.com/mailman/listinfo/moneydance-info

[Mike Bailey]

I can reconcile the number of shares in either my brokerage account
and my mutual fund accounts with the statements I receive from the
broker. Providing I have entered all the transactions; dividends,
interest, etc. that have occurred during the period correctly
MoneyDance agrees with the statements I receive or download it will
balance too. In Quicken I often ran into slight errors because
Quicken apparently used a different rounding algorithm than the one
used by the broker but that was seldom off by more than two or three
ten thousandths or one or two thousandths of a share according to how
many decimal places the share balance was calculated. Frankly I don't
know how you would get around that because each financial institution
is going to use their own rounding algorithm in computing statements.
So far I have not encountered that in MoneyDance, but I would not be
surprised if I did.

I am not arguing with you Martin, I am just trying to understand what
your problem is.

Joe Bailey

Post by Martin & Carol
That would indeed be a big help, but...If you have selected an
investment
account, in MD, the page will display all the securities in that account
with the number of shares for each, the share price, the "current Value" of
that particular security, the portfolio value, the cash valueof the account
and the total value. What I am asking for is that by selecting a date all
those values would agree with the statement that was mailed to you.
Martin Alper

[Ric Werme]

Post by Mike Bailey
I can reconcile the number of shares in either my brokerage account
and my mutual fund accounts with the statements I receive from the
broker. Providing I have entered all the transactions; dividends,
interest, etc. that have occurred during the period correctly ...

Aha - that's the trick, if I just enter all the data accurately, the
numbers will match. In fact, I won't need a reconcile function and
Moneydance could be smaller by its removal. :-)

Post by Mike Bailey
I am not arguing with you Martin, I am just trying to understand what
your problem is.

Our problem is simply that we're imperfect and are looking for a crutch.
What the heck, I've been programming computers for 35 years and the
computers are quick to point out I _still_ make mistakes. At least with
Moneydance I can write my own!

-Ric Werme

[Martin & Carol]

Two part reply

-Regarding round off e.g. If I have a dividend reinvested I make sure that
the number of shares purchased is correct and let the rounding off occur in
the dollar value. The number of shares are forever while the dividends are
ephemeral.

-Regarding your understanding my problem do you appreciate the satisfaction
I can have if my computer program (MD) agrees with the statement that my
financial institute sends to me. That can only happen if my program reflects
the conditions that did exist on the day the statement is reporting.

Martin Alper

Post by Mike Bailey
I can reconcile the number of shares in either my brokerage account
and my mutual fund accounts with the statements I receive from the
broker. Providing I have entered all the transactions; dividends,
interest, etc. that have occurred during the period correctly
MoneyDance agrees with the statements I receive or download it will
balance too. In Quicken I often ran into slight errors because
Quicken apparently used a different rounding algorithm than the one
used by the broker but that was seldom off by more than two or three
ten thousandths or one or two thousandths of a share according to how
many decimal places the share balance was calculated. Frankly I don't
know how you would get around that because each financial institution
is going to use their own rounding algorithm in computing statements.
So far I have not encountered that in MoneyDance, but I would not be
surprised if I did.
I am not arguing with you Martin, I am just trying to understand what
your problem is.
Joe Bailey

Post by Martin & Carol
That would indeed be a big help, but...If you have selected an
investment
account, in MD, the page will display all the securities in that account
with the number of shares for each, the share price, the "current Value" of
that particular security, the portfolio value, the cash valueof the account
and the total value. What I am asking for is that by selecting a date all
those values would agree with the statement that was mailed to you.
Martin Alper

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[Mike]

Some corrections in the text.

Post by Eric Werme
I've have trouble getting my head around investment accounts in both
Quicken and MoneyDance. I think I'm making progress, though. While
I don't like some of my understanding, I can see where it addresses
problems with my old understanding. If the following makes sense,
I'll add it to the Wiki. If I'm not making sense, please set me
straight.
----
1a) A cash account that may not really exist.
1b) One or more securities that represent shares of stock or other valuable.
This models brokerage accounts well. You have a cash account that you
put money in and use to buy stocks. Proceeds from sales goes back into
the cash account and you can transfer money between there and your checking
account at your bank.
The investment account is cash-centric. The Register page shows a
running account of the cash available, the Portfolio View and Securities
Detail pages show the number of shares owned, but not running total.
Investment accounts are also used to track mutual funds. You can
group several funds into one account or keep each separate.

If you download from a Financial Institution, your Account better look
the same as the account that the FI holds. IE. as many securities in
the one account as your FI has. Hence no "keeping each fund separate".

Post by Eric Werme
Mutual Fund transactions are generally purchases paid for by check
from a checking account or sales with proceeds remitted by a check
to you. The cash account isn't really necessary, and could be kept
at $0.00 for the life of the account. However, you may want to use
it to keep transaction dates straight. Suppose you write a check
to buy shares in a fund. If you make that be a transfer to the cash
account, you can track the date you wrote on the check. When the
fund acknowledges the transaction, then you can enter a Buy Shares
transaction in the investment account and track the date the fund
used. In this scenario, the cash account isn't really a "pile of
money," it's more like a log of transfers of money as checks
make it through the mail and securities system.

Again, when you download from a FI, they will show a "Buy" and unless
you want to edit the transaction (Which is not MD's forte), you better
show cash in the account to satisfy the "buy" from.

Post by Eric Werme
The cash-centric nature of Investment Accounts makes sense with
double entry accounting systems like Moneydance. Unfortunately,
in situtations like mutual funds, tracking the balance in the
cash account isn't all that interesting. Tracking the number of
shares of the fund is interesting, but it's not tracked.

And this is purely opinion and not (my opinion) applicable to a wiki.
Mike

[Ken Ganshirt]

Post by Martin & Carol
For some of us the use of a Financial program is mostly to verify that
all the account statements we receive are correct and to have a tax
record. If we can not verify that the number of shares are correct then
we have lost an important tool. That's because MD doesn't allow us to
select the date for which the worth of the account is displayed. If we
could set that date to the statement date then we could verify our MD
worth with that on the account statement.
Martin Alper

Hi Martin,

I understand completely. The solution to that, of course, would be to have
a securities display like Quicken's, which has multiple columns and lets
you describe what data you want displayed in each of the columns, rather
than only showing a single column.

The columns I normally display are "current price", "cost/share", "# of
shares", "% gain", "market value".

Perhaps someone could be persuaded to do a plug-in like that for
Moneydance.

...ken...

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[Ken Ganshirt]

Post by Martin & Carol
Two part reply
...[snip]...
-Regarding your understanding my problem do you appreciate the
satisfaction I can have if my computer program (MD) agrees with the
statement that my financial institute sends to me. That can only
happen if my program reflects the conditions that did exist on the
day the statement is reporting.
Martin Alper

Martin, that can also be controlled by how you use your accounts in
Moneydance. I suspect, from your stated concern, that you update your
prices between statements, thus causing your Moneydance information to be
out of synch with the statement when it finally arrives. That is, you
potentially have price entries in Moneydance that have newer dates than
the prices on the statement's date, when it finally arrives.

I don't bother. I just update from the statement, when it arrives.
Therefore I don't have an issue of the prices being out of synch with the
statement. My broker doesn't have the ability to download my account
information so I only receive a paper statement. I always update from that
paper statement. I don't look for prices from any other source in between
statements.

Well ... actually I do check the prices between statements, either in the
newspaper or at online sources. I just don't update them in the program.

I understand why you would want the latest information about your
portfolio, or parts of it, so this isn't a criticism or anything. Just an
observation about why it's not such a big interest for me to have the
ability you would like to see in Moneydance.

Different strokes. :-)

...ken...

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