[Kmymoney] How to change value of investments

[Bill Gee]

Hi Jack and Allan -

Thank you both for your lengthy responses.  I think the light has dawned a bit 
... and the answer is that a CD is NOT an investment!  Just for grins I tried 
putting it in as a regular asset.  It is FAR easier to work with that way.  No 
need to invent a brokerage account (whatever that is).

Yes, I read through the handbook on investments.  It was not very helpful.  I 
think the main reason it did not help me is that I define an investment 
differently from KMyMoney.  To my mind, an investment is something which is 
expected to earn money over time.  KMM is far more specific than that, 
restricting them to "stocks, bonds and mutual funds".

I tried looking in Tools-Prices for the item that KMM complains about.  Not 
there.  I finally did find it.  It was a security within an equity.  I don't 
know how it got there nor do I understand why equities and securities are not 
exactly the same thing.  Nevertheless I was able to delete it, and now KMM 
will save the file without complaining.

Those unexpected behaviors in KMM are really confusing.  Today I was trying to 
put change-of-value transactions in for a 401k.  Even though the transaction 
was supposed to increase the value, it did not.  Indeed, the resulting value 
went down!!!  Must be that New Math...  I tried putting it in as a single 
share with the total value and as a large number of shares with value $1.  The 
resulting end value of the investment was not the same even though the 
transaction value was identical.  Yikes ...

My goals are really pretty simple. I want to track my net worth and I want to 
compare expenditures to budgets over the course of a year.  The first can be 
done on a spreadsheet.  The second entails enough transaction detail to make a 
spreadsheet unwieldy.

I think even for my various 401k plans it will work much better to set them up 
as simple assets.  As far as I know, none of my 401k plans have a brokerage 
account.  I am not able to write checks against their value and I have never 
had to put anything "on deposit".  All of them came from various employers and 
were funded by payroll deductions.  All the fancy fol-de-rol that goes along 
with "Investments" is of no value to me.

Kind regards - Bill Gee


On Monday, December 08, 2014 18:13:29 Jack wrote:
> [I realize this is pretty long, but I've reread it a few times, and
> hopefully it will help you understand how KMM handles investments, at
> least enough for your immediate needs.]
> 
> On 2014.12.08 14:08, Bill Gee wrote:
> > Hello everyone - First post here.  I've been trying to get along with
> > KMyMoney for some months.  For checking and credit card accounts it
> > is working reasonably well.  However, I am totally unable to
> > understand how investment accounts work.  My frustration limit has
> > finally been reached, hence I am reaching out for some help.
> 
> Have you read the handbook section on investment accounts?  If not,
> please start with that.  If, once you have this sufficiently figured
> out, you have comments or suggestions on improving the handbook, send
> them (either to the list or to me).  We don't have any tutorials, but
> it would certainly be possible to create one or more.  Perhaps you can
> keep notes as you work your way through this, to create an outline of
> the information that seems to be missing or not obvious.
> 
> In parallel to Allan's message, the first thing to understand about
> investment accounts in KMyMoney is that you really need a pair of
> accounts.  The actual Investment Account holds the equities, or the
> investments themselves, in the form of stocks, bonds, or mutual
> funds.   Then, you need a Brokerage Account (which is generally a
> checking account.)  In KMyMoney, the investment account ONLY contains
> investments.  The brokerage account contains the cash used to buy the
> investments and the cash produced by dividends or interest.  Whenever
> you create a transaction in the investment account, if that transaction
> requires or produces cash, you must specify the account to use for that
> cash.  By default, that is the brokerage account associated with that
> investment account.  If your investment account is "My 401K account"
> then the default brokerage account is "My 401K account (Brokerage)".
> It is easiest to let KMM create that account when you add the
> investment account, but you can also add it later.  You can specify
> other accounts in investment transactions, but it is much easier if you
> just accept the default name.  You can also specify an unrelated
> checking account for those investment transactions that need one, but
> it is easiest to use the default brokerage account.
> 
> > Example:  I have a certificate of deposit with my credit union.
> > Every three months they pay a dividend back into the value of the
> > CD.  This is reported on my monthly statements.
> 
> I don't know if it is specific to the US, but for those who have not
> heard of it, a CD (certificate of deposit) is an investment instrument
> where you give the bank an amount of money for a specified period of
> time.  At the end of that time, they return that money plus a
> pre-specified amount of interest.  In some cases, they pay the interest
> on a routine basis, such as monthly or quarterly, either paying it back
> into your checking account or added it to the value of the CD.  If you
> withdraw the money before the end of the specified term, you pay a
> pre-specified penalty, which generally means you get much less or no
> interest.
> 
> A CD (certificate of deposit) is not really either a stock, bond, or
> mutual fund, but can be adequately modeled by one.  Assume you will buy
> a CD for which you pay $80.  Start by depositing at least $80 in the
> brokerage account.  Then create an "buy shares" transaction.  There are
> many ways of doing it, but I would suggest in this case, specifying 80
> shares at $1/share.  You can invent the name and symbol for the
> investment, as Allan suggests.
> 
> > How do I add this dividend to the investment account?
> 
> If the interest is adding to the value of the CD, then enter it as an
> "add shares" transaction, adding the number of shares based on
> $1/share.  If the interest is actually paid to your bank/checking
> account, enter it as an "interest" or "dividend" transaction, for the
> specified amount, and indicate the appropriate brokerage account.  The
> difference between interest and dividend doesn't really matter too
> much.  What could matter is the category you use.  However, how
> important that is depends on whether you will use KMM to help fill out
> your tax forms.  Since in the US, the IRS does distinguish interest
> from dividends, it helps if you use the category that will match how
> you have to claim it.  I believe that CD interest is interest, but I'm
> not certain.
> 
> > I have been trying this method, which does not work.
> > 
> > 1) Open the account ledger.
> 
> For which account?
> 
> > 2) Create a new entry.
> > 3) set Activity = Dividend
> > 4) set Interest = Interest and put the amount paid in the field.
> > 5) But there is no way to save this entry!  The Enter button remains
> > gray.
> 
> I suspect you didn't specify the brokerage account.  If you put your
> checking account here, it should work.  However, this won't be correct
> if the interest just increases the value of the CD.
> 
> > AERGHHHHHH!
> > 
> > I tried changing the Activity to Reinvestment Dividend.  When I do
> > that, it wants to call it one of Bond, Stock or Option.  This is none
> > of the above. Double Argh!
> 
> If the interest increases the value of the CD, then instead of "add
> shares" as I said above, you could use "reinvest dividend."  However,
> rather than specifying the amount, you specify the number of shares,
> sticking to $1/share.  This way, you do get to specify the category of
> interest in the appropriate field.
> 
> > Is there a tutorial for dummies on this?
> > 
> > I have another investment account for a 401k.  Every time I save the
> > data file, KMyMoney says that there is an issue with the data.
> > Specifically, it has no opening price for the investment.  I cannot
> > figure out how to either enter the opening price or delete the
> > investment.
> 
> In KMyMoney, deleting things is often frustrating, as you can't delete
> something that is referred to by any other object in the file.  In this
> case, you probably have at least a "buy shares" transaction for that
> investment.  When you specifically enter a buy or sell shares
> transaction, you enter the price per share on that day.  However,
> sometimes KMyMoney thinks that the investment existed before your first
> purchase, and it wants to know the price on or before that creation
> date.  There are many paths to the dialog for that, but you can use the
> "Tools/Prices" menu item.  That will bring up a dialog listing all the
> investments it knows about.  Type the name you used for the stock in
> the search box, and check the "Show all stored prices" box at the
> bottom.  You should then see at least one price - probably for the
> purchase of the stock.  Click on that price, then click the "New"
> button.  You will then get a dialog where you can specify the price on
> or before the date from the error message.  You can either find the
> real price for that date, or just use the initial purchase price.
> 
> > I use KMyMoney version 4.6.6 on 64-bit Fedora 20.  This is the latest
> > RPM from
> > the Fedora repositories, and NO, I am not going to compile from
> > source to get
> > a later version.
> 
> In this case, you shouldn't need to do that, since you haven't run into
> any bugs, just some obscure terminology, perhaps.
> 
> > Thanks - Bill Gee
> 
> I've been using KMM for over five years, and I still run into cases
> where things are not quite obvious.  KMyMoney does many things behind
> the scenes which may not initially make sense, but they almost always
> do, once you understand what it is doing.  I do most of the work on the
> handbook - so if you come up with any specific examples of missing,
> misleading, or just unclear instructions or explanations, please let me
> know.
> 
> I'd be happy to create a set of HowTo's or Tutorials, but since I use
> most of KMM without having to think about it now, I find it very hard
> to think of what really does need to be explained first, without adding
> unnecessary complications.  That's why I suggested you keep notes as
> you work thorough this and figure out how to make KMM work for you.
> 
> Jack
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