Brokerage Account

I've been using Quicken for over 10 years, but for the first time, I'm trying to set Quicken up to track a brokerage account - which I just opened. The brokerage account is set up with a money market fund as a
"sweep" account, from which I purchase stocks - pretty much standard I think.
For some reason, I'm having trouble understanding how to set this up in Quicken, especially how to tie in the money market fund with the brokerage account. In other words, should the money market fund be a security within the brokerage account, or should it be a separate account?
I'm trying to use the new account wizzard to set this up, but there doesn't seem to be a point where I can say "OK, here's the money market fund I want to use as the sweep/cash account" Or am I just totally on the wrong track?
Just looking for some basic pointers. Thanks
Tom
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What version of Quicken are you using? Starting with Q2005, you no longer have a linked cash/checking account. There's just one account for both securities and cash. I just opened a brokerage account with Siebert today, in fact, and since it has direct download to Quicken, it will be interesting to see how my check gets recorded. When I opened the account, I chose a money market "sweep" account. And when I set up the brokerage account in Quicken, I entered a check in my checking account with a transfer to my new Siebert brokerage account. I'm assuming there will be no ticker symbol for the money market account that stores the cash balance, and that dividends (or is it interest?) either increase the cash balance (MM shares) or are reinvested in their respective securities, depending on how your brokerage handles it.
Hope this helps,
Margaret

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I'm using Quicken 2005 Premier, which I should have mentioned before.
Right now, I have it set up in Quicken with the money market fund as a separate "cash" account, and then the Brokerage account itself which holds the stocks. That seems to reflect how it's set up at the FI.
When I make a buy (which I've only done once so far), the transaction shows up as a WithdrwX transaction from the MMF account, and as a BoughtX transaction in the brokerage account.
Based on what you're saying, this may not be correct (or the best way), but I think I need to do it for a while to get a better feel for it - I can always go back and start again from a backup of my data file.
Tom
Margaret Wilson wrote:

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I have bee using Quicken since DOS version 4. Over the years I have opened several brokerake accounts. I personally treat all of the sweep money accounts as a banking account and have one account that I use for all the stocks in an Investment Account called "ALL Stocks". I find by doing it this way I always have a handle on all my stocks in one place.
The only exception is my 401K rollover and my IRA accounts that I treat individually as a brokerage account on an individual bases and include the sweep money account as cash in the account.
good luck

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Tom Pfeifer wrote:

I think you're right, a money market fund as a sweep account is fairly common. You can handle it a number of ways - partly depending on what version of Quicken you are using. I personally prefer to handle it the way my broker does as that keeps my account in Quicken looking more like my account at the brokerage.
In my case, a sweep of cash from my account is used to buy shares in a money market fund in the investment account; and when cash is needed to buy securities, shares of the money market fund are sold: so that's what I do in Quicken, The money market fund is a security, just like any other security, and the buy and sell transactions appear in my downloaded transactions just like those for any other security.
My broker is not fastidious about avoiding real cash in the account, so on occasion, my Quicken account contains some actual cash for a while ... just as my account with my broker does.
In newer versions of Quicken - starting around Q2003 or Q2004 - Quicken will recognize a "check" transaction written on the cash balance in an investment account; before that it would not, though you could simulate a check anyway. Quicken has what is called a "linked checking account" which you can tie to an investment account; this is more-or-less a leftover from the days when you could not create a check transaction directly in an investment account. I've never used a linked checking account, mostly because they did not provide me with any significant benefit: I have written less than a dozen checks in half a dozen years.
With the advent of check writing directly from an investment account, the linked checking account is no longer a necessity (though it is still available); but there are still a few glitches being worked out when it comes to cash type transactions initiated from investment accounts. For example, occasionally some of the reporting of those transactions is a little fishy. I expect this will be cured before too long, though it is not a major concern for me because I do so little check writing from my investment accounts.
--
John Pollard
First initial underscore Last name at mchsi dot com
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John Pollard wrote:

Thanks John. In my case, I'm doing this in an IRA account. I opened the Brokerage account by selling an IRA mutual fund with the same FI. The proceeds from that transaction went to the money market fund, which shows up (online) at the FI as a separate account from the brokerage account.
For now, this is the way I've set it up in Quicken (2005 Premier). I buy stocks by selling shares of the MMF. I'm still feeling my way, but for now this seems to work and make sense.
Tom
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John, are there any problems if you want to calculate a total money weighted return including cash? I thought the only way to do this, at least with older versions of quicken, was to 'securitise' your cash account? Rick
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Rick wrote:

I have no idea.

I don't believe there is any conceptual change in Quicken's treatment of investment account "cash" and shares held in a money market security; so I do not see why there would be any change in the way things are computed. I think the basic change was to allow Quicken to recognize check/withdrawal/deposit transactions in an investment account utilizing the cash balance in the account (as opposed to only explicit transfers in/out and MiscInc/MiscExp transactions).
Others with more experience in this area are welcome to chime in.
--
John Pollard
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Hi, Tom.
My Merrill Lynch CMA account is over 25 years old now. It started back in the days (late '70s) of high interest rates when we got as much as 14% on CDs, and money market funds sometimes made 20% or more. Banks were not allowed to pay interest on checking accounts in those days, and there were no interstate banks with branches all across the USA. The CMA account was the first one that I saw that would let me write checks on my stockbroker account. My former firm's bookkeeper could carry my monthly check across the street to the local ML office in California and deposit it into my CMA account and I could write a check on it the next day in Oklahoma - without waiting several days for the postman. And it would earn interest until my check cleared. In those days, every day of "float" was worth something. We had a whole different mindset then from the last couple of years when accounts have paid a small fraction of 1%.
The CMA account originally swept available cash into a money market fund, then redeemed shares to cover any of my checks after they cleared, or to pay for any stocks that I had purchased. My monthly statement showed the flows into and out of the MM fund, along with any small cash balances outside that fund. I made it a practice never to pay bills with CMA checks, because I didn't get those cancelled checks back. (That was long before Check 21.) Instead, I would write myself a CMA check and deposit it in my local bank, then pay bills from that bank account. Also, when I received cash or checks - for professional fees or anything else - I would deposit those in my local bank account, then write a check to move all or some of it to CMA. It was a little bit of extra work, but it kept both my CMA account and my local bank account(s) "clean as a whistle". Nowadays, I make the transfers with ML's FTS (Funds Transfer Service), using the Internet.
I've never bothered to set up a separate "account" in Quicken for this ML MM fund. In MY books, it's all "just cash" in the brokerage account. In recent years, ML has switched from the MM fund to a "bank account program" for my uninvested cash. Each month they report how much interest I've earned on that banking program and I record that as interest income, increasing the cash balance in my ML brokerage account. The invested cash, plus any uninvested cash (often less than $1), plus the market value of my securities, add up to the balance on my monthly CMA statement, which I reconcile to my ML Account in Quicken.
Each broker has a different system, of course, and yours might not work the same way. I have another broker account which carries a small cash balance and pays me interest on it each month. It theoretically allows checkwriting, but on the few occasions when I've withdrawn cash from it, I've phoned the broker, then driven to the office and picked up a check from them. It's more hassle, but the bookkeeping is the same: simply allow my Quicken account to show the cash balance, along with the securities the broker is holding, and reconcile the account regularly.
It has been so many years (and Quicken versions) since I set these up that I don't know how I would do it today. I don't know what the wizard looks like or says. But I think I would create a single Quicken Investment Account. Then I would write a check on my local bank account and give it to the broker. In Quicken, I would use this check to record a transfer into my new broker account. Then I would record purchase of any securities from this cash balance. I probably would not record movement of swept cash to and from the MM fund, so long as the broker manages those funds as a part of my single account.
Setting up the broker account and making the initial investment may seem like a single event, but I think it would be easier to understand - now and in the future when you are looking back - to record it in two or more steps: (1) create broker Account; (2) deposit cash or securities into the Account; (3) use cash in the Account to purchase securities, which remain in the Account. Later, of course, (4) record interest income, increasing cash balance. But (4) might be to record dividend income, rather than interest, since this is a MM FUND. As we've discussed here before, a MM fund is a special kind of mutual fund: The fund itself earns interest income, then issues new shares as a dividend to distribute its earnings to its shareholders; the fund earns interest but its shareholders receive dividends.
You'll need to ask your own CPA whether my recollection of these rules is still current. I've been retired for over a decade and tax rules change every day. Banking and brokerage rules and practices have changed a lot, too.
RC
--
R. C. White, CPA
(Retired - no longer licensed to practice)
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