I just loaded all of the info for my Roth IRA in Quicken 2007 Deluxe. It looks like it is ignoring the dividends and capital gains that go reinvested into the same fund for the gain/loss calucation. This obviously reduces the apparent gain in the value of the fund(s). The cost basis gets increased with the reinvestments but I still think gain should be calcluation by subtracting current value by original purchase price. Am I wrong in my thinking?
That's how Quicken does it and that's the way it should be done.
It's no different than if a dividend check was mailed to you, and you used the dividend check to purchase more shares of the security. A reinvestment is really a Dividend plus a Buy.
You should check the Quicken "Glossary" (and follow up any links/references to other Quicken Help) for the definitions of the various "return" values that Quicken can display. Amount "invested" and amount "reinvested" can play different roles in different return calculations.
Well, John is certainly correct as to how Quicken does it, and if he thinks its the way it should be, that's ok too. However, I've taken the approach that (in a IRA?401(k) type of account) you only care about gain - no matter whether it's appreciation or dividends paid. Why? Simply because there is no tax consequences (different) and so there is no concept of "increasing your cost basis."
So how do I handle it - very simply by letting the new shares show up in the account as reinvested dividends or whatever, but set the cost of those shares to $0. Then you track the growth of the fund without the cost basis increasing over what "you" invested into the IRA, etc. Works for me.
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