[Kmymoney] How to change value of investments

[Jack Ostroff]

I'll try a longer response later, but just a quick response concerning  
investment accounts.  You do not actually need a brokerage account.   
The issue is that because of the way the Investment Accounts were  
originally set up, they cannot hold cash, so cash to buy a security  
(more on those differences later) the cash needs to come from  
somewhere.  If a stock pays dividends, or you sell shares, the cash  
needs to go somewhere.  Many investment companies just let you have  
cash in the account.  From that perspective, KMM's investment and  
brokerage accounts as a pair match to the real account.  It can even  
get more interesting if the company does a "sweep" automatically  
investing the free cash in a higher interest form - to the user it's  
just more interest on the cash, but more formally, it's actually a  
security.

Modeling a CD as a plain checking or even savings account can work  
fine.  However, that does not let you distinguish liquid from frozen  
assets.  If that doesn't matter to you, then the simple approach is  
fine.

There are a number of changes to how KMM handles investments that have  
been proposed and discussed.  However, there have been no agreements on  
what to change, and the real issue is that the limited developer time  
is being spent on things considered higher priority.

Again - if you have specific suggestions for making the handbook easier  
to read and understand, I'm happy to discuss.

Jack

On 2014.12.08 20:30, Bill Gee wrote:
> 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
> > _______________________________________________
> > KMyMoney mailing list
> > KMyMoney at kde.org
> > https://mail.kde.org/mailman/listinfo/kmymoney
> 
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