[GNC] Dealing with mutual funds

Mon Nov 11 20:20:25 EST 2024

It's probably right, but a fee should not have an "exchange" rate -- if
this is the CHF cash account, you should be simple able to add the CHF fee
of 1,78 - that's the only thing that makes me wonder if something is still
off a bit.

On Mon, Nov 11, 2024 at 3:17 PM Boniforti Flavio <boniforti.f at gmail.com>
wrote:

> 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
>>>
>>

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