Advanced report rate of return

[Stefano M Canta]

I agree with what you are saying, and this is the way I am accounting for
my stocks.
What is misleading is the return rate. The money I invest is 3000 USD, and
not 6000 USD.
I would like to have this option for my own accounting, to know for example
that in my Vanguard account I transferred 3000 USD and made 100 USD, even
if I rebalanced some stocks within Vanguard itself. There should be an
option to compute the total money in column as the money going into the
brokerage, instead as the sum of the money going into each single stock
account.
Suppose I do 4 transfers a year within the same brokerage from 3000 USD
without involving any other outer assets. My total money in column would be
12000, which lowers my rate of return incorrectly.

Stefano


-----

Stefano Mihai Canta, Ph.D.
Electrical Engineering Specialist
Antenna Subsystem Operations

Space Systems/Loral
3825 Fabian Way M/S G-43
Palo Alto, CA 94303-4604
Tel  1-650-852-5808
Fax 1-650-308-1808


On Mon, May 13, 2013 at 1:18 PM, John Ralls <jralls at ceridwen.us> wrote:

>
> On May 13, 2013, at 12:23 PM, Stefano M Canta <cantastefano at gmail.com>
> wrote:
>
> > Hello,
> >
> > You can do the transaction buy selling 3000-USD worth of stock A, and use
> > the cash in the brokerage account to buy stock B.
> > Or, which is equivalent, move 3000-USD worth of stock A (which will be
> > 3000/3100 of the amount of shares I have) to stock B. It's the same
> > operation.
> > What I am saying is that the 3000 USD never left the brokerage, but they
> > are just rebalanced between investments.
> > The total money in column should take into account the money that goes in
> > the brokerage account, not the sum of the money that goes into each stock
> > separately.
>
>
> Your brokerage is a container account. It has a cash account and a
> collection of stock accounts. Barring a
> corporate action -- merger, spinoff, or rename specifically designated as
> a non-taxable event -- the only way to
> change your holdings from A to B is to sell A and buy B, with the proceeds
> of sale going to the cash account in between. The difference between the
> cost and proceeds of A should be accounted for in a separate pair of
> splits. The details are explained in the Concepts Guide.
>
> Any other way of accounting for it will screw up the Advanced Portfolio
> Report, and might lead you to report it incorrectly
> to your tax authorities. (In the USA, there's one way of holding a
> brokerage account where you don't need to keep track of the capital gain or
> loss from the sale of A, called a Roth IRA. The Advanced Portfolio Report
> doesn't know about those.)
>
> Regards,
> John Ralls
>
>