[GNC] Dealing with mutual funds

Mon Nov 4 19:57:34 EST 2024

Hello.

I don't think that the "USD Dividends" would be under IBKR - that should be
somewhere else, probably under "Income" somewhere. When you are paid a
dividend, it either goes into the "Cash" fund, or else it is reinvested and
more stock is purchased.  If the dividends are invested, you'd have a
"purchase" of that stock.  For example, if you received $100 in dividends
and it purchased 5 shares of VT stock (using simple numbers to keep it
easy), you have a transaction in IBKR-VT that purchased 5 shares for $100
and the "other" account would be an income account -- for me, it goes in
"Income:Investment Income:Taxable:Dividends".

Other comments -- see below, but I do want to note (as others have) that I
am not an accountant.

On Sun, Nov 3, 2024 at 4:25 AM Boniforti Flavio <boniforti.f at gmail.com>
wrote:

> Hi Richard.
> I think I was already going that route -->
> [image: image.png]
>
> As of now, I have just put all the CHF Cash in that account.
> As I've added CHF in 5-6 different transactions and in between those I
> have also converted to USD and bought VT stocks, would I need to zero the
> "CHF Cash" account, then add each CHF wire transfer transaction
> individually?
>

If each wire transaction is separate, there is the chance that the exchange
rate would be different, so I would enter them as different transactions.

But unless you take all of the funds from the CHF Cash account, it doesn't
need to be zeroed.  Assuming that there is $1000 in CHF Cash and $1000 in
USD Cash, you could remove any or all of the CHF Cash, and then add the
appropriate USD amount to the USD Cash account.

Next, you would have a transaction for the purchase of VT stock, with the
funds comes from the USD Cash account.

> And then for each currency conversion I did, create the according
> transaction between "CHF Cash" and "USD Cash" accounts, after which I would
> add the VT purchase transactions - right?
>

That sounds right to me.

> If I do it like that, I could "hide" the ForEx trading fees by simply
> adjusting the conversion rate (like if I had converted CHF 1'000.- and I
> got USD 1'140.- and paid 1 USD fees, I could just "ignore" the fee and
> adjust the conversion rate so that it gives CHF 1000 --> USD 1140). Would
> that work?
>

It may "work" but it would probably be more accurate to have a split
transaction with that shows the CHF 1'000 decreasing by 1'000 and then the
USD account going up by 1'141 with a USD 1 decrease assigned to the account
where you track the exchange fees. That way the CHF-to-USD rate would be
correct, and you could see what you are paying for exchange rates.

| Would this process also work when buying VT stocks? In that case, I buy a
fixed amount of VT stocks at the VT price, and I could
| "hide" the fees by adjusting the stock unit price?!

Again, I suppose you **could** do that, but I usually put the fees in
separately. If I spend $1000 purchasing a stock that is worth $998, the
other $2 is assigned to my account for Investment Fees
("Expenses:Investment:Fees")

> What's not clear to me at this point is: if I will have 1000 VT stocks,
> where will the actual value be reflected/calculated? Is it depending on
> manual retrieving the VT quotes via Finance::Quote?
>

Yes, if you are getting quotes via the stock quote your VT value will
reflect the last price update you retrieve. It will NOT change your
transaction.  However, by "hiding" the fee as you propose, it will look
like you've lost money when you have not. See the following example:

You spend $100 to purchase 10 shares of VT, but there is a fee of $5.  The
reality is that you paid $95 for those 10 shares, or $9.50 a share...
however, by "hiding" the fee in the price, it looks as if you paid
$10/share.  The next day, the price goes up to $9.75 -- you have actually
gained $2.50 ($0.25 gain on 10 shares); however, in GnuCash, it will look
like the price has "dropped" from $10 to $9.75 and that you have lost $0.25
per share).

> Thanks,
> F.
>

I hope this is helpful...

>
> Am Mo., 21. Okt. 2024 um 19:32 Uhr schrieb R Losey <rlosey at gmail.com>:
>
>> Part of this is up to you, and GnuCash is flexible because configurations
>> can change.
>>
>> I assume IBKR is your broker, and you have a single, normal brokerage
>> account that deals in mutual funds and stocks.
>>
>> I would create a brokerage account and note that it is with IBKR; I
>> assume cash is help somewhere like a sweep account. I cannot tell if you
>> have both a USD sweep and a CHF sweep; if you do, I'd create a subaccount
>> for each. Then I'd create an entry in the Security for the VT mutual fund,
>> and create a subaccount in IBKR something like IBKR-VT that tracks the VT
>> shares you own. Each buy or sell of VT will be its own transaction, with
>> the funds coming from the USD sweep.  Money you send to IBKR will, I
>> assume, go into the CHF sweep, and then either manually or automatically,
>> get converted to USD as you make purchases.
>>
>> Dividends are just another transaction; if you are reinvesting dividends,
>> you'll add the transaction, but the "other" account will be some dividend
>> income account - for me, I have an "Income:Investment
>> Income:Taxable:Dividends" account for these things. Dividends that are not
>> reinvested, will be entered in the sweep fund instead of purchasing more of
>> the mutual fund, but would still be assigned to the dividend account.
>>
>>
>>
>> On Sun, Oct 20, 2024 at 7:04 PM Boniforti Flavio <boniforti.f at gmail.com>
>> wrote:
>>
>>> Hi all.
>>>
>>> I'd like to get some suggestions/guidance and eventually validate if my
>>> way
>>> of doing this is correct.
>>>
>>> I've put some money into IBKR (CHF) which I then converted into USD to
>>> buy
>>> VT. For the time being, I've just added the transactions in the "CHF
>>> Cash"
>>> account on IBKR, where I now see the actual money I put there. Now
>>> there's
>>> a few questions I can't answer on my own.
>>>
>>> As of today there is still some cash left on both CHF and USD accounts
>>> (peanuts, just to cover currency conversion fees), and the rest is
>>> invested
>>> in VT, how should I proceed to enter the various transactions, so that it
>>> finally reflects the actual status (some CHF Cash, come USD Cash and the
>>> rest in VT)?
>>>
>>> I bought VT like 4 or 5 times, of course at different stock prices.
>>>
>>> Should I create a sub-account called "VT" (type "mutual funds"), then add
>>> each purchase transaction by taking the money from my "USD Cash" account,
>>> until the balance corresponds to the actual one on IBKR?
>>> Of course, in advance I would need to add the CHF-to-USD currency
>>> conversion for each time I bought VT shares. Here I don't know if I
>>> should
>>> add a sub-account related to conversion fees or not.
>>>
>>> Last but not least: when I will have set things right (which means having
>>> the CHF and USD cash accounts showing the actual/real amount and also the
>>> VT number of shares), will it be enough to update the VT share price
>>> manually to see how much I do have on IBKR?
>>>
>>> And how do I deal with dividends? Should I add another sub-account for
>>> the
>>> dividends? I automatically reinvest dividends in VT - how to deal with
>>> this?
>>>
>>> I know it's a bunch of questions, but maybe some kind soul will be able
>>> to
>>> help me walking through this :-)
>>>
>>> Thanks,
>>> F.
>>>
>>>
>>> https://www.instagram.com/boniforti_music
>>> https://soundcloud.com/boniforti_music
>>> https://bonny-j.bandcamp.com
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>>
>>
>> --
>> _________________________________
>> Richard Losey
>> rlosey at gmail.com
>> Micah 6:8
>>
>

-- 
_________________________________
Richard Losey
rlosey at gmail.com
Micah 6:8
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