Cash transfer in/out vs performance calculations

[mli2001]

Hello Mark,

I set up multiple portfolios in FM, each portfolio is a brokerage account, with their own default cash Account.

Could you let me know whether the following understanding is correct?

When I transfer between the brokerage accounts, I simply put in "transfer in" in one and "transfer out" in the other. There is no way to link these transfers in FM.

These type of transfers do not affect the monthly return reports, I.e. the transfers are accounted for, "transfer in" will not boost returns.

If I set up a bank account to "transfer in" salary income for the year, it only changes the total portfolio value, but does not affect the return reports.

Thanks!

[Mark]

Hi mli2001,

Yes, you would have to buy/transfer in and then sell/transfer out to move money between accounts. You can use either a transfer in or buy to add cash. You can use either a transfer out or sell to remove cash. Personally, I prefer buys/sells, as they are simpler, and you don't care about having a different cost basis date/value for cash usually.

These types of transactions will not typically have a large impact on returns, but they will have an impact. For example, if you add cash, the adding of cash at the market value is not going to have an impact, but the overall portfolio is now more heavily weighted towards cash. So, the return of your cash has a slightly larger impact on the overall portfolio's return.