[GNC] Dealing with mutual funds

[Boniforti Flavio]

Hi David.
I'm replying to your feedback as it's less text :-) I'll reply to Richard's
afterwards as well - thanks to you both already!

And a final note: GnuCash never stores the exchange rate. It calculates it
> from the two (actual) amounts include in the transaction. Focusing on the
> number there (and whether it matches what the broker says the share price
> is) will result in dissatisfied experiences since it never matches.


Are you saying that if I enter a transaction which involves currency
exchange and I look at that transaction in two months, the numbers won't be
the same anymore?

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Am Di., 5. Nov. 2024 um 05:23 Uhr schrieb sunfish62 at yahoo.com <
sunfish62 at yahoo.com>:

> Note: I am not an accountant, and am based in the US, whose laws will
> differ from Switzerland's.
>
> I agree that the Dividends account belongs under Income.
>
> As an overview, Richard, I'd point out that if you buy something for 1000,
> and 10 of the cost is for tax (or delivery, or service charges, or
> whatever), your cost is still 1000. While it may be interesting to identify
> those specifics, for personal books, it is a lot of work that has little
> benefit.
>
> In specific:
>
> Many forex outfits I encounter don't even tell you their fees. They simply
> tell you the final exchange rate you receive. To track the fees, you'd have
> to know the inner workings of each firm and calculate them yourself (or
> know the rate they are getting, and calculate the difference) . Personally,
> it's not important information for the amount of work involved. (This is
> similar to the recurring discussion about mortgage payments that do not
> match)
>
> Similarly, with the stock, you can say that you bought that stock at 9.50
> a share, but if you don't recoup the service charge, you'll still lose
> money when you sell at 9.75 a share. Moreover, in GnuCash, if you use the
> lot feature to manage capital gains, it will mis-calculate the gains if you
> track the service fees separately. At least, that was my experience when I
> used the lot feature some years back.  (I stopped using it for various
> reasons)
>
> And a final note: GnuCash never stores the exchange rate. It calculates it
> from the two (actual) amounts include in the transaction. Focusing on the
> number there (and whether it matches what the broker says the share price
> is) will result in dissatisfied experiences since it never matches.
>
> David T.
> On Nov 5, 2024, at 3:59 AM, R Losey <rlosey at gmail.com> wrote:
>>
>> 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>:
>>>
>>>
>>>>  --
>>>> ------------------------------
>>>>
>>>>  Richard Losey
>>>>  rlosey at gmail.com
>>>>  Micah 6:8
>>>
>>>
>>>
>>>