Adjusting share holdings to match brokerage stmt

Yes, it is rounding errors. What happens in the "real" world is you buy or sell shares at a total cost and then the price per share should be calculated.

Use the Total Cost and the exact number of shares that you broker shows and let Quicken calculate the cost per share which really does not have to be exact.

To correct your situation I suggest going back to each purchase/sale transaction and let Q do its thing. Then your share quantity will match and so will your costs.

Eric

The best way: Fix the original transactions. Go back and change the quantity to match the broker's statements. Quicken will recalculated the price to as many decimal places as it wants, but that's fine. In the future, always enter the exact number of shares from the broker's statement.

Most practical: That's up to you. If you don't want to go to the work of correcting the original transactions, just do an Adjust Share Balance.

Hi, Jo.

I second Eric's advice.

This question comes up very often here. The answer is always the same. You are never going to get a check from your broker or fund manager for a fraction of a cent. And your broker's statement or mutual fund balance is never going to show that you hold a millionth of a share of anything. Cash is always rounded to the nearest penny - and no further. Shares in your account are rounded to the nearest whole share for individual securities and to the nearest 1,000th of a share (.001) for mutual funds.

So, always record cash transactions rounded to the nearest penny. Always record share transactions to the nearest whole share or the nearest .001 share, as appropriate. Calculate the per-share price to as many decimal digits as you like, but don't use that price in calculations, except as a check on the reasonableness of the actual cents or shares recorded. When Quicken asks which of the factors to adjust, let it adjust the price per share, leaving the exact total amount and total shares as you know them to be "in the real world".

Quicken provides a shortcut way to adjust the shares balance, and sometimes it makes sense to use this method. But purists (like me) and obsessives (as you say you are) will always want to go back and delete all the incorrect entries and record them properly. When done correctly, this will eliminate the fractional-share differences.

RC

Also to add to R.C.'s response it also depends on the broker. In my worse case I have some funds in Vanguard that downloads to five significant digits after the decimal, Vanguard's website only details the transaction to three places after the decimal and in Quicken it wants to reconcile to two places after the decimal. I've personally elected to round to three and tie to what I can see on the website. I don't accept the Quicken offered placeholders and I spot check the rounding to make sure it is only off a few

I never like disagreeing with RC, so I almost never do. And I am now finding it even more difficult because, for some reason, his post has not appeared from either of the newsgroups that I am currently subscribing to. The only way I know what RC said in this thread is by reading Oilcan's post. Sorry for any confusion this may cause.

It is not true that you can count on share balances being delivered accurately to two or three decimal places.

Those may be common in many situations, but I can tell you for a certainty that those degrees of "accuracy" are not universal.

There are at least two problems which RC did not address.

First: not all financial institutions maintain or report share balances with the same accuracy RC suggests. I get share balances "reported" to at least thousands of a share (.001) for my stock holdings with Smith Barney and with USAA (I have had share balances reported to four decimal places, though I can not say that is happening currently).

Secondly: I am certain that, at least some, financial institutions report your holdings (in every security, including stocks) to three (or possibly four, or more) decimal places, but carry your holdings internally (in their computer systems) to as much as six decimal places. This means that you may see your share holdings in Quicken "drift" away from being accurate with your share holdings at the fi at some point. [I know that RC can demonstrate for you how this can happen: rounding problems are subject to both the time the rounding occurs, and to the time/degree it is reported.]

I believe the problem is more likely to occur when you download transactions to investment accounts; and very likely to occur when you "reinvest" in stocks.

I have complained to a couple of brokerages in the past, and things have gotten better. I almost never see the problem with accounts I download from any more.

Hi, John - and Oilcan.

I KNEW I should have thrown in a qualifying statement there, but I was in a hurry and Jo's original question didn't seem to require the clarification. I should have known that you guys are lurking (and in a newsgroup, "lurking" is A Good Thing!) and would call me on it. ;^}

account are rounded to the nearest whole share for individual securities and to the nearest 1,000th of a share (.001) for mutual funds.

Cash IS rounded to the penny, but shares are USUALLY rounded to even shares or .001 >> I

S> I never like disagreeing with RC, so I almost never do. And I am now

Go ahead, John. Disagree with me whenever you like, especially when I'm wrong. You started using Quicken several years later than me, but you caught up and passed us very quickly, and I'll defer to you on just about any Quicken question. (But you do seem to need a different news server.)

As I said, I don't download transactions. I haven't invested in mutual funds in a decade or so, and I never had one (for myself or a client) that did not round to .001 share - at least, so far as I could see on the documents. I may have been entitled to .3333333333 shares, according to the behind-the-scenes calculations, but .333 share was what I got. And if I had tried to sell .3333 shares, Quicken would have yelled "Foul" - and so would the fund manager, probably. John, would YOUR mutual fund actually let you sell .33333 shares, if that's what their calculations said you have? Or would they limit your sale to .333 shares?

(John's parenthetical remark that I might be able to demonstrate the effect of timing on rounding apparently refers to the sequence of your arithmetic. For example: 100 * 2/3 = 67, right? Yes, if you multiply 100 times 2 first, you get 200, then divide 200 by 3, you get 66 2/3, which rounds to

1. Or if you divide 100 by 3 you get 33 1/3, then multiply times 2 to get

Dividend reinvestment plans and employee investment plans also often result in unusual fractional shares. And the sale of shares to get the cash to pay fees adds to the complexity. My advice to record actual dollars and cents and actual shares and fractions still applies, but must be tailored to fit the specific plan and the sequence of the step transactions. The basic idea, though, remains: Record what really happened to the cash and shares that we can see, while letting any fine rounding differences end up in the cost-per-share calculation, which is used once and then discarded except as a historical memo.

The same general principle applies for other exotic transactions, such as stock splits, mergers, spin-offs, cash paid in lieu of fractional shares...any transaction that involves the calculation of amount per share or fractional shares. Record the real-world quantities (of cash and shares) that you can see (in your hand or on the documents). Record the actual number of shares that you can sell. Carry out any per-share calculation as far as you like, but don't change the real-world dollars or shares to agree with the per-share calculation.

RC

I didn't mean to make it sound like I could sell a more of shares than my financial institution said I had. In fact, I think that unless one can demonstrate an error on the part of the fi, the fi's record of the number of shares owned is the final word.

No, the problem I'm referring to (and as I said, it may be a shrinking problem) is when the financial institution reports number of shares to a different degree of accuracy than what they have in their system.

One financial institution carried number of shares to six decimal places in their computer system, reported transactions to 4 decimal places, and reported holdings to 3 decimal places.

One situation where I know this created a problem for me was for reinvestments in "stocks" (which do not have any agreed upon 3 decimal place limit on the accuracy of your holdings of them). At one time I was getting transactions for the reinvestments rounded to 3 decimal places while the fi was carrying them in their system at 4 decimal places.

Another situation where this occurs is in 401k accounts where the fi is selling mutual funds that are special versions of the funds available for non-401k accounts. Those 401k funds are maintained in "units", not "shares", and those units are carried by (at least some) 401k admins to an accuracy of six decimal places (but only reported to 3 decimal places).

A good point, and you probably can't make it too often.

But actually, I had something slightly different in mind.

If the financial institution is carrying your share balance to a greater degree of accuracy than they are reporting (or downloading) to you, as time goes along, your Quicken share balances will drift further away from your fi holdings.

Suppose you get two reinvestment transactions one year; the first for .4002 shares in June, the second, for .4004 shares in December. But suppose your fi, while recording the number of shares in their system to 4 decimal places, is only reporting (and downloading) share values to 3 decimal places ... so they report that you acquired .400 shares in June and .400 more shares in December and you Enter (or download) that into Quicken.

Ignoring all other shares of that security for purposes of simplification, at the end of the year Quicken would show you holding .800 shares, but your financial institution, which is rounding their internal 4 digit numbers to 3 decimal places, will have added .4002 and .4004 to arrive at .8006 (in their system), which they will report to you as .801 shares.

So Quicken was getting transactions with shares rounded as of the date of the transaction; while your fi was accumulating the shares at a higher degree of accuracy, then rounding.

You see .4002 rounded = .400 .4003 rounded = .400 .400 + .400 = .800

The fi has .4002 + .4004 = .8006 rounded = .801.

If the fi were rounding shares in their internal system to 3 decimal places at the time of the transaction, the problem wouldn't occur. If the fi didn't print (or download) values rounded to a lower degree of accuracy than they maintained in their internal system, the problem wouldn't occur.

What I want is for the fi to present to me the number of shares to the same accuracy they maintain them in their own system. If that's six decimal places, then print, or download, six decimal places.

As I suggested earlier, I see less and less of this; but it is still true of a couple of fi's.

Users should be advised: an "Adjust Share Balance" transaction is a Quicken "placeholder" and it comes with some interesting, and often confusing, side effects.

When I want to adjust my share balance, I use Add Shares or Remove Shares.

Remember computers work in binary, not decimal. (Except when using BCD (binary coded decimal), but that's a whole different matter and indeed, might only refer to IBM mainframes - the only 'true' computers, but I digress....). In the good old days, one could write a BASIC program such as:

and the loop would run 11 times because in the little computer's mind, 10 x .1 doesn't equal 1! A little shy. Ah yes, ain't mathematics wonderful. And if a computer can't get that 2 line program right, how can we and FIs? :-)

(PS: It's been a long time since I wrote in BASIC; I hope I got that syntax correct.)

In my case, I download to five significant digits, web shows three and paper statements show three. So which is the correct number? Probably five, but the legal document is (paper statement) three so I choose to round to three. Yes it does get out of wack overtime. Due to my election for Vanguard to manage - subtractions of fees, new investments and occasional rebalancing I have 200 + transactions per month over six funds. Don't get me started that the management fee is downloaded as a remove shares and not as a sale and a misc expense. Ugly.

In all - I do not fault Quicken - its Vanguard's problem that they can correct by modifying the statement issued and the web presentation. Until they do (not holding my breath...) I just live with this. If they do modify - what a mess.

Cheers!

Oilcan