Req: Approach to handle Summary Data

I am in need of advice as to how to handle an investment.

contribute money, and the money manager buys shares in hundreds of companies for me, based on the profile I have established. Unlike a mutual fund, I actually own all the shares of each of the hundreds of companies in my porfolio, and that is the way oddball presents it's monthly statement. Each monthly statement shows the previous months's value of each company, this months value, how many shares I own of each. It also shows all sells, and buys and additional money I contributed, as well as the monthly distribution I take, dividends, interest and any management expenses.

data each month so that I can know what growth or loss I obtained.

companies in my portfolio, only how the total oddball is doing. They do not have site download transactions at this time....

show me the monthly performance for the total investment without me having to enter hundreds of monthly transactions.

that value being the amount of money I originally contributed to oddball. I set the value to be one dollar for each share. Example, if I originally sent oddball 100 dollars, Quicken showed 100 shares of "fake company" each at one dollar a share.

high level. If for example I received for a given month a total of $10 in dividends, I would show "fake company" providing $10 dollars of dividends to cash. Then I would buy 10 dollars of fake company with that cash balance. (I know I could do reinvest dividends). If there was a management expense for a given month say of $5, I would sell 5 shares of fake company and put that procedes in the management expense catagory, and decrease the number of shares of oddball by five.

this tedious method I came up with. I do not think my method provides the information I am looking for.

I am in need of advice as to how to handle an investment.

contribute money, and the money manager buys shares in hundreds of companies for me, based on the profile I have established. Unlike a mutual fund, I actually own all the shares of each of the hundreds of companies in my porfolio, and that is the way oddball presents it's monthly statement. Each monthly statement shows the previous months's value of each company, this months value, how many shares I own of each. It also shows all sells, and buys and additional money I contributed, as well as the monthly distribution I take, dividends, interest and any management expenses.

data each month so that I can know what growth or loss I obtained.

companies in my portfolio, only how the total oddball is doing. They do not have site download transactions at this time....

show me the monthly performance for the total investment without me having to enter hundreds of monthly transactions.

that value being the amount of money I originally contributed to oddball. I set the value to be one dollar for each share. Example, if I originally sent oddball 100 dollars, Quicken showed 100 shares of "fake company" each at one dollar a share.

high level. If for example I received for a given month a total of $10 in dividends, I would show "fake company" providing $10 dollars of dividends to cash. Then I would buy 10 dollars of fake company with that cash balance. (I know I could do reinvest dividends). If there was a management expense for a given month say of $5, I would sell 5 shares of fake company and put that procedes in the management expense catagory, and decrease the number of shares of oddball by five.

this tedious method I came up with. I do not think my method provides the information I am looking for.

I am in need of advice as to how to handle an investment.

contribute money, and the money manager buys shares in hundreds of companies for me, based on the profile I have established. Unlike a mutual fund, I actually own all the shares of each of the hundreds of companies in my porfolio, and that is the way oddball presents it's monthly statement. Each monthly statement shows the previous months's value of each company, this months value, how many shares I own of each. It also shows all sells, and buys and additional money I contributed, as well as the monthly distribution I take, dividends, interest and any management expenses.

data each month so that I can know what growth or loss I obtained.

companies in my portfolio, only how the total oddball is doing. They do not have site download transactions at this time....

show me the monthly performance for the total investment without me having to enter hundreds of monthly transactions.

that value being the amount of money I originally contributed to oddball. I set the value to be one dollar for each share. Example, if I originally sent oddball 100 dollars, Quicken showed 100 shares of "fake company" each at one dollar a share.

high level. If for example I received for a given month a total of $10 in dividends, I would show "fake company" providing $10 dollars of dividends to cash. Then I would buy 10 dollars of fake company with that cash balance. (I know I could do reinvest dividends). If there was a management expense for a given month say of $5, I would sell 5 shares of fake company and put that procedes in the management expense catagory, and decrease the number of shares of oddball by five.

this tedious method I came up with. I do not think my method provides the information I am looking for.

Well, that was strange! My reply consisted of an entire quote of your original post, but didn't include my response!

I'll try again.

investment for a period is only dependent on the following variables: balance at beginning of the period, date and amount of money YOU add to the investment, date and amount of money YOU take out of the investment, and the balance at the end of the period.

As you can see, all the internal machinations like dividends that stay within the account, the money manager's fee and so forth don't enter into the equation because they don't reflect inflows and outflows of cash FROM YOU or TO YOU. From an non-mechanical standpoint, the money that flows into the account that doesn't come from you (e.g., dividends) and money that flows out of the account to someone else (e.g., money manager fee) DOES affect your return, but there's no need to enter these sort of transaction. Instead, these sort of transactions can simply be reflected in the ending balance of the investment.

For example: Let's say the you make an investment on the first day of year XXXX of $1,000. (So, the opening balance is $0.) During the year the money manager takes $100 out of the account for his effort and at the end of the year the balance in the account is $1,050. The account has netted you 5% for the year.

If you'd deposited the same $1,000 in a CD with a one-year maturity at

5% the balance of the CD at the end of the year would be $1,050, or 5%. Same as the "managed" account. You can ignore cash flows that don't come out of your pocket or go into your pocket.

So, if the only thing you want to do is track the IRR of oddball, you only need record money you add to the account, money you take from the account, and then make an adjustment to the quote of "fake company" (1 share with an original per-share cost of the amount of money you initially put into the account) such that the market value of fake company +/- net cash represents the total value in the account.

It'd probably be just as easy to do this in a spreadsheet.

Tom Young

Tom, Thank you so much for helping me to better understand how Quicken is handling this account. Yes, my main goal is to know how well the investment is peforming without having to enter the hundreds of individual transactions each cycle.

I will try your approach in a "test" account with small numbers so I can better see how Quicken is handling the matter. I also want to track the other things taking place, like interest, dividends and management fees, just for the heck of it. Those items are needed for my income tax reporting, and I want to check those amounts that I get on 1099 forms against that which is in Quicken. Sounds like you are saying is to track those items in a spread sheet, which I can do.

I had attempted to enter the hundreds of transactions for two cycles, but found the effort way too exhausting, and I usually had a few typos to track down, but the bottom line was that it was too much effort for the benefit Quicken provided. The summary approach seems to be the best alternative.

Thanks again for coming to the rescue,

Doc.

Actually, there's a certain amount of funkyness to Quicken's calculation of IRR so my suggestion would be to track income and expense in Quicken (numbers entered at a summary level) and to do the IRR calculation on a spreadsheet. For example:

1) On 1/1/2007 I transferred $1,000 from checking to my new ($0 opening balance) "managed money" account. 2) On 1/1/2007 I purchased 1 share of fake company at $1,000 a share. 3) On 6/30/2007 the money manager sent me $100. 4) On 12/31/2007 the money manager told me the account was worth $1,200. Accordingly, I adjusted the quote on fake company to $1,300.

Blend this all together and run an Investment Performance report from

1/2/2007 to 1/1/2008 (Quicken insists on having a non-zero opening balance, hence the 1/2/2007 date) and you get a 31.49% return, which is correct.

Now, wedge in a new step 4

4) On 9/30/2007 money manager took $50 for his fee

and change the old step 4 to

5) On 12/31/2007 the money manager told me the account was worth $1,200. Accordingly, I adjusted the quote on fake company to $1,350.

put in $1,000 at the beginning of the year, got $100 at the middle of the year and have a portfolio valued at $1,200 at the end of the year. Accordingly, the returns calculated under either scenario should be the same, right?

Unfortunately, Quicken doesn't see it that way and includes the cash flow to the money manager as a cash flow to you, upping the return to

37.16%.

There's folks here who have studied Quicken's IRR more closely than I have (as a math major and finance guy I've just always done the calculations myself on a spreadsheet) and they might suggest some way of finessing this problem. I've always used Quicken as a pure accounting program and done my "performance" calculatons outside of the program.

Tom Young

Tom, I have been dwelling on the proposed solution, and want to take it a further.... I need to account for the monthly distirbution from Fake Company that flows to my Checking account in Quicken. I take it that I would need to sell some portion of Fake Company, and transfer that cash to my "Bank" account. I am not able to figure out how to do that using your solution of owning but one share of Fake Company.

I am hoping that you (or anyone else) are able to provide a solution for this matter.

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Original Posting and answer follows......

Folks, I am new to Quicken 2007, and even newer to this newsgroup that I just found. I am in need of advice as to how to handle an investment.

I have an investment (lets call it "oddball" for this posting) whereby I contribute money, and the money manager buys shares in hundreds of companies for me, based on the profile I have established. Unlike a mutual fund, I actually own all the shares of each of the hundreds of companies in my porfolio, and that is the way oddball presents it's monthly statement. Each monthly statement shows the previous months's value of each company, this months value, how many shares I own of each. It also shows all sells, and buys and additional money I contributed, as well as the monthly distribution I take, dividends, interest and any management expenses. You can imagine that it would take several hours to enter all of this itemized data each month so that I can know what growth or loss I obtained. I actually do not care to know the details of each of the hundreds of companies in my portfolio, only how the total oddball is doing. They do not have site download transactions at this time.... What I want to do, is to enter as little data as possible, so that Quicken can show me the monthly performance for the total investment without me having to enter hundreds of monthly transactions. I attempted to create one single "fake company" and establish a value for it, that value being the amount of money I originally contributed to oddball. I set the value to be one dollar for each share. Example, if I originally sent oddball 100 dollars, Quicken showed 100 shares of "fake company" each at one dollar a share.

The problem I run into is in handling all the many monthly transactions, at a high level. If for example I received for a given month a total of $10 in dividends, I would show "fake company" providing $10 dollars of dividends to cash. Then I would buy 10 dollars of fake company with that cash balance. (I know I could do reinvest dividends). If there was a management expense for a given month say of $5, I would sell 5 shares of fake company and put that procedes in the management expense catagory, and decrease the number of shares of oddball by five.

I am wondering if any of you would be able to come up a better approach to this tedious method I came up with. I do not think my method provides the information I am looking for.

At this point I'm not sure if you're still trying to use Quicken as a tool for measuring the performance of the Oddball account, or as a pure accounting program for tracking - at a high and summarized level

- the INCOME (e.g., dividends, interets, etc.), EXPENSES (money manager fees) and TRANSFERS (money to/from your checking account) associated with Oddball. I'll assume you're in the "accounting" mode of thought because of the funkyness of Quicken's IRR (performance) calculation as pointed out by the examples I set up in the last post.

If you try out the examples (BTW, create a separete file called something like "TEST" to work through the examples so you don't pollute your real file) you'll see that cash within the Oddball account can actually go negative, even though this wouldn't happen in "real life." It doesn't make any difference to you if cash is negative in Oddball because you're not tracking any individual asset. That is, you're not tracking all of the hundreds of stocks in the account, and there's no need to track cash either. What matters to you are certain cash FLOWS (the ones enumerated above), not cash BALANCES. Plus, the month-end adjustment of the "quote" for Fake Company's 1 share brings the TOTAL balance of the account (1 share of Fake Company +/- cash balance) to the total given to you by the money manager.

To be clearer:

1) You send money to Oddball. Accounting entry: reduce cash in Checking, increase cash in Oddball. This is a TRANSFER event.

2) Money manager buys 137 different stocks. Accounting entry: nothing.

3) Money manger sells 46 different stocks. Some of the cash is reinvested, some remains in the account. Accounting entry: nothing

4) Eighteen of the stocks declare a dividend. Ten of the dividends are paid in cash and remain in the account as cash and eight of the dividends are reinvested in the issuing companys' stock. Accounting entry: Total up the value of all eighteen dividends and make one entry in the account as straight dividend income. This is an INCOME event.

5) Three stocks split; two split 2-for-1 and one splits 3-for-1 Accounting entry: nothing

6) One of the stocks (Old Company) in Oddball is acquired by New Company in a stock-for-stock transaction; you receive .5 shares of New Company for every share of Old Company. Accounting entry: nothing

7) Money manager sends you some money from Oddball. Accounting entry: reduce cash in Oddball and increase cash in Checking. This is a TRANSFER event.

8) Money manager sells 7 stocks for $15,000, buys 3 stocks for $6,000, takes out his $4,000 fee and temporarily leaves the remaining $5,000 in the account for a purchase he plans to make in a few days. Accounting entry: reduce cash in Oddball by $4,000 in a Miscellaneous Expense transaction, classifying the expense as "Money Manager Fee."

9) At month-end the manager reports a value for Oddball which is different than the month-end value Quicken reports Accounting entry: change the quote (up or down) for the one share of Fake Company so that the Quicken account value (value of Fake Compay +/- cash in account) agrees to the manager's figure.

In actual practice things just CAN'T be as straight-forward as I've outlined it above. For example, in the stock-for-stock acquisition (number 6 above) what if there's a fractional share left over that get's settled in cash? That IS an income event - at least for tax purposes - but since you don't know the basis in Old Company you'd be hard-pressed to figure out what entry to make. In a portfolio of hundreds of stocks you'll experience all sorts of oddball transactions

- tax-free spin-offs, taxable spin-offs, return of capital transactions, taxable acquisitions and so forth and so on - that will defeat your best efforts to make your Quicken accounting perfectly accurate.

You might be better off pressing the money manager for better monthly reports and doing your performance calculations in a spreadsheet.

Tom Young

Tom, Your most recent reply is exactly what I was looking for. You really did a great job in the way you explained the methodology to use for this situation. I think you covered all bases and your examples are super.

Attempting to enter hundreds of monthly transactions was far beyond anything I wanted to tackle, but could not figure out how to handle enough of the detail, to give me the summary level that I was after.

I plan on using your suggestion of setting up a fake account to mess around with to better understand how this will work out for me. I really appreciate all the time you took to respond to my inquiries, and provide a great solution. Perhaps there are more folks out there, that will also benefit from your solution. Maybe the makers of Quicken will see this exchange, and include this scenario as an example in one of their "how to do" things.

Thanks again,

Doc

From: "Dr. Marou"

| Tom, | Your most recent reply is exactly what I was looking for. You really did a great job

< snip >

| | Thanks again, | | Doc

Please stop creating new threads. This reply belongs in the same thread you were helped in.