[GNC] Dealing with mutual funds

Mon Nov 11 16:17:00 EST 2024

Hi again.
I think I got it right with the split transactions -->
[image: image.png]

But for my understanding: is it correct that even if I entered everything
in one transaction, it ended up creating 2 lines called "Split Transaction"?

F.

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

Am Mo., 11. Nov. 2024 um 22:10 Uhr schrieb Boniforti Flavio <
boniforti.f at gmail.com>:

> Hi Richard.
>
> As you might've read in the other thread, I've made some progress and
> solved the issue related to VT stocks and the currency account.
> Now I am just getting back to you on the last part of this thread:
> registering the Forex transaction with splits, including fees. I've now
> tried to simulate converting CHF 10.- into USD and adding the fees as
> splits.
> First of all, in the "CHF Cash" account I enter a transaction called
> "Forex CHF.USD", where I put "10" in the "Withdrawal" column. When
> confirming the transaction, I'm prompted with the following pop-up window:
> [image: image.png]
> To me this is perfectly fine: I get asked about the conversion/exchange
> rate as I'm transferring CHF into USD.
> Now it gets strange to me. Let's assume I have CHF 1.- in fees - I would
> edit the transaction I just confirmed, click on "show splits" and then add
> a Withdrawal of CHF 1.- (from the same account I'm editing, "CHF Cash"),
> for which the other account is "Fees Forex CHF.USD". When I first enter the
> withdrawal I again get asked about the conversion rate - whereas if I first
> enter the deposit on the "Fees Forex CHF.USD" account, then I can enter the
> CHF 1.- withdrawal without GNC asking me for conversion.
> Is this normal/expected behavior?
>
> Thanks,
> F.
> https://www.instagram.com/boniforti_music
> https://soundcloud.com/boniforti_music
> https://bonny-j.bandcamp.com
>
>
> Am Mo., 11. Nov. 2024 um 17:35 Uhr schrieb R Losey <rlosey at gmail.com>:
>
>> My answers will be below your items. I'm glad I've been able to be of
>> some help.
>>
>>
>> On Sat, Nov 9, 2024 at 5:58 AM Boniforti Flavio <boniforti.f at gmail.com>
>> wrote:
>>
>>> 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.
>>>
>>
>> Yes; dividends would increase both of those (in accounting jargon,
>> however, one of these - the IBKR:USD Cash is a debit and the other is a
>> credit)
>>
>> You could do reinvestments that way; I don't bother... I go to the stock
>> and make a "Reinvest Dividends" purchase, with the Income:USD Dividends
>> being the "other" account.
>>
>>
>>
>>> *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.
>>>
>>
>> What you are doing will work; however, you should be able to do this all
>> in one transaction using a split - since it is one transaction, I find it
>> better to do it as one transaction with splits instead of two separate
>> transactions. (But that is partially preference). As a matter of
>> preference, I tend to have exchange rate fees as it's own expense, but it
>> is perfectly fine where you have them.
>>
>> If I read your example above correctly, you reduced your CHF cash by CHF
>> 9999.78 CHF, of which CHF 1.78 is the transaction fee and 9998 is converted
>> to USD 11,214.26. Thus, to do this in one transaction, you'd have the
>> following three-way transaction:
>>
>> 1) Decrease IBKR:CHF Cash by 9999.78
>> 2) Assign CHF 1.78 to the expenses "Forex fees" - there are "shares" and
>> "price" columns, but you can ignore these and just enter the amount. I
>> think there may be examples online when I was trying to figure out how to
>> do this.
>> 3) Have the remaining CHF 9998 convert to USD 11,214.26 -- this should
>> produce the correct exchange rate.
>>
>>
>>> *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
>>>>
>>>
>>
>> --
>> _________________________________
>> Richard Losey
>> rlosey at gmail.com
>> Micah 6:8
>>
>
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