[GNC] Dealing with mutual funds

[sunfish62 at yahoo.com]

The point for me is that (for the US at least), separating out the fees and commissions actually masks the true cost of the investment. When I first started tracking investments, I separated the fees and commissions, and it took me forever to figure out why my gains calculations never matched the broker's. It didn't help that the Advanced Portfolio report at the time didn't take the separated fees entries into account, although I don't know whether this is still the case.

⁣David T. ​

On Nov 8, 2024, 12:15 AM, at 12:15 AM, R Losey <rlosey at gmail.com> wrote:
>I stand corrected (well, really, I'm sitting corrected)
>
>
>On Wed, Nov 6, 2024 at 3:03 PM sunfish62 at yahoo.com
><sunfish62 at yahoo.com>
>wrote:
>
>> According to H&R Block, determining your basis involves "generally
>the
>> purchase price plus any commissions or fees paid."
>>
>> So, unless I'm missing something, no, your brokerage *won't* report a
>gain
>> in this example, since gains are calculated against your basis, and
>not the
>> price. And basis includes fees.
>>
>> David T.
>> On Nov 5, 2024, at 11:13 PM, R Losey <rlosey at gmail.com> wrote:
>>>
>>> A very interesting way to look at it; I agree that many exchange
>services
>>> have a "worse" rate because it includes their fee; others show a
>"good"
>>> rate, but tack on fees. And clearly, if there is no fee shown in a
>receipt,
>>> one cannot enter calculate it.
>>>
>>> Although your statements about the stock are true as far as they go,
>I
>>> would have thought that if you purchase a stock at $9.50/share, that
>is the
>>> "price".  Your "cost" is actually $10/share.  My understanding is
>that if
>>> you sell it for $9.75/share, the brokerage will report that you have
>a gain
>>> of $0.25/share, and one will be liable for applicable taxes on
>capital
>>> gains.  "Price" and "cost" are not the same thing.
>>>
>>>
>>> On Mon, Nov 4, 2024 at 10:23 PM sunfish62 at yahoo.com
><sunfish62 at yahoo.com>
>>> wrote:
>>>
>>>> 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
>>>>>>
>>>>>>
>>>>>>
>>>>>>
>>>
>>> --
>>> _________________________________
>>> Richard Losey
>>> rlosey at gmail.com
>>> Micah 6:8
>>>
>>
>
>-- 
>_________________________________
>Richard Losey
>rlosey at gmail.com
>Micah 6:8