Investment cash accounts


S

Sam

I am using Money 2001 Deluxe & Business and I have attempted several
times to set up my investments so that I can keep track of these
accounts but I have become very frustrated and I cannot understand the
theory of each investment having a cash account. I do not understand
the flow of the cash from one account to the next. My brokerage company
is Vanguard and I can download my transactions and import them into
Money. A review of my vanguard statements shows me that I have multiple
accounts each of which holds at least one fund/stock and in most cases
multiple funds/stocks. For example I have an "Individual" account that
contains two funds, a money market and a small cap index fund. I also
have an "Individual Brokerage" account that holds only one fund at this
time, a Sep-IRA account and a Roth-IRA account both of which holds
multiple funds. For now I will just talk about the brokerage account,
the problem is the same for all the accounts so if I can figure out how
to fix one account I should be able to fix the others. I first created
an investment account in Money and then I imported the data from
vanguard. Apparently either during the import or when I created the
account the software also created a cash account associated with the
brokerage investment account. After the import the investment account
balance was negative (I cannot remember by how much). I suspected that
the problem was related with the cash account so after trying in vain
to figure out what the problem is I decided to delete the transactions
in the cash account. After doing that the investment account balance is
correct, it matches the account balance from my statement. I am quite
sure that this is not the correct way to handle this issue but I did
not know what else to do.

So I guess my question is, what are the cash accounts for? If I were
to enter the transactions manually would I enter a transaction moving
the money from my checking account to the cash account and then from
the cash account to the investment account? Why does it have to happen
that way? That is not the way that I actually handle my investments
with vanguard. When I make an investment I write a check, send it to
vanguard and tell them where to invest it, I do not send them money and
tell them to put it in a "cash account" and then later tell them to
invest that money in a particular fund.

If anyone can explain the logic behind the cash accounts and what I
need to do to handle my investment accounts I would really appreaciate
it. My ultimate goal is to be able to download my vanguard investment
transactions every quarter and keep my Money files up to date without
having to manually enter the transactions. Thanks in advance for any
help...

Best Regards, Sam
 
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D

Dick Watson

Most brokerage accounts allow cash to be held between transactions and
during settlement periods. (Sell one day, buy the next, etc.) This is what
the Investment Account associated Cash Accounts are supposed to be
mirroring. If you were to enter your transactions manually, you could do
exactly as you say and transfer the money to the cash account and then buy
investment positions from the cash account. You can also just enter Buy
Investment/CD transactions in, say, your checking account targeting the
Investment Account and bypass the cash account completely.

Let's be clear on another thing. An Investment Account can simultaneously
hold positions in many Investments. It wasn't clear from your posting that
you understood this.

It doesn't have to happen that way and for many, but not all--401ks accounts
are an exception IIRC--you don't have to have a associated cash account. (At
least this is true for Deluxe editions; I can't say about the * Business *
editions.)

When you download from Vanguard, you may find that Money can't figure out
how to deal with their data any other way than with an associated cash
account. I can't say for sure. I just enter my data the old-fashioned way.
 
C

Cal Learner-- MVP

Apparently either during the import or when I created the
account the software also created a cash account associated with the
brokerage investment account. After the import the investment account
balance was negative (I cannot remember by how much).
In addition to what Dick said, what you need to add to the mix
is a transaction to account for the funds added to the appropriate
cash account that was used to buy the funds. That could be a
deposit, or it could be a transfer.

In addition, there is an Opening Balance for the investment cash
account. It may be that you need to adjust the initial balance to
account for when the transaction entry started. To adjust the
initial balance, right-click the account in the Account List and
choose Account Details. Alternatively, just enter a deposit dated
before the other transactions to account for the initial cash.
 
H

harrelsonesq

Another way to look at it is to examine the difference between a "dividend"
transaction and a "reinvest dividend" transaction. I happen to have one
brokerage account with funds I like and funds I don't like, but haven't
found the right time to get rid of yet. (When I need a capital loss,
usually.)

Dividends get reinvested automatically into the funds I like. Dividends on
the funds I don't like get paid into the cash account. Sell transactions
also get "swept" into the cash account, and I can write checks or make Visa
transactions against that money.

I used to have a Vanguard fund, and, IIRC, it did not have an associated
cash account. When I sold it, they wrote me a check and mailed it to me.
This seemed a bit dated, which is part of the reason I sold that fund,
rather than one with more functionality. That was a couple of years or so
ago, though, and they might have added options since then. It might be
worthwhile to ask them about it.

Susan
 
S

Sam

So the correct sequence of transactions would be a transfer from my
checking account to the cash account and then an investment buy
transaction moving the funds from the cash account to the investment
being purchased?

Also, would you see a benefit in upgrading from where I am today
(Money 2001) to a more current version, Money 2006? Money 2001 does
everything I need but if '06 is easier then maybe I should upgrade.


Thanks, Sam
 
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Dick Watson

M01->M06 upgrade is probably not a winner if you are happy with M01. There
are some good features added, but lots of baggage and some bad features.

The sequence of events you suggest is typical.
 

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