[GNC] Dealing with mutual funds

Sat Nov 9 06:58:31 EST 2024

Hi Richard.
Now I finally got time to read through your reply and understand/learn.
Here is my feedback/reply. Thanks again!

*USD Dividends*
You're right, it was not at the right place. I moved it under "Income".
When I get paid dividends, how should I register this transaction? Do I
increase both the "Income:USD Dividends" and the "Assets:IBKR:USD Cash"
accounts?
As the dividends on IBKR are automatically reinvested, I would then add
another transaction, representing the purchase of VT stocks.

*Wire transactions*
Yes, I do have more than one wire transfer from my Swiss checking account
to IBKR. I've added these transactions as "Assets:Swiss Checking Account"
--> "Assets:IBKR:CHF Cash".

*Forex CHF.USD*
When I sell CHF to buy USD (to be able to buy VT stocks in USD), I have to
pay a transaction fee. As an example, I exchanged CHF 9,998.- and got USD
11,214.26 for which I paid CHF 1.78 in commissions. This I entered as
follows into GnuCash:
"Assets:IBKR:CHF Cash" --> "Assets:IBKR:USD Cash" and I verified the
exchange rate (which should match the "T. Price" in IBKR). In the above
example this was correct (what I see in IBKR's statement is exactly the
exchange rate GNC has calculated).
I then added a second transaction to register the Forex fee:
"Assets:IBKR:CHF Cash" --> "Expenses:IBKR:Forex fees in CHF". Does this
sound right? And is there any way to have the fees included into the Forex
transaction (like with splits)? I tried this route, but I was being asked
about the exchange rate - which in my eyes shouldn't apply, as both the
"CHF Cash" account on IBKR and the expenses account "Forex fees in CHF" are
in CHF.

*Fees in general*
I agree with you keeping the fees separate from the transactions they've
been generated from.

Can you help me with the above questions?
Thanks,
F.

https://www.instagram.com/boniforti_music
https://soundcloud.com/boniforti_music
https://bonny-j.bandcamp.com

Am Di., 5. Nov. 2024 um 01:57 Uhr schrieb R Losey <rlosey at gmail.com>:

> 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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