Cash Accounting qn

[P.G]

Hi,

I - hopefully unlike everyone else - entered all my transactions without regard to cash accounting. Now I'm interested in accounting for the non-invested cash I'm holding, as well as separating investment performance from growth due to additional funding.

Before I go and do this, am I correct in thinking that I'll need to manually create a matching but opposite transaction in the default cash account for all purchases,sales and dividends to account for this cash? Is there any way for this to happen 'my magic'?

I've also copied and pasted each investment into different portfolios (I've a 'default' portfolio -with cash accounting - ordered by broker and other portfolios listing the same investment by asset type, theme etc). Is it the case that I'll have to be quite careful to only I record the transactions/dividend in the default 'by broker' portfolio - otherwise the cash accounting transactions won't happen presumably?

TIA
PG

[Mark]

Hi PG,

Unfortunately, there is no real easy way to automatically record the corresponding cash entries after the fact. If you had many transactions you could export them to a CSV file, massage the data in Excel, and re-import back into the cash account. This may be worth it if you have lots of transactions. See "File / Import (Export) / Transactions / Generic...".

If you have an investment located in multiple sub-portfolios and you record a transaction in that investment, Fund Manager will find the most appropriate default cash account to use, no matter where you record the transaction. So, you wouldn't have to worry about where you were in FM when recording these transactions.

When an investment belongs in multiple sub-portfolios, the highest priority default cash account is when a default cash account is assigned to a sub-portfolio that directly contains that investment.

[P.G]

Thanks Mark, much appreciated.

In order not to destroy anything by tinkering, I did a backup/restore onto a different computer and downloaded a different copy of FM to test my changes out (you'll be pleased to know it all worked fine!).

Given that all I seem to have is a bunch of transactions in a new cash.dat file and a couple of mods to the default cash account portfolio settings - can I just copy the cash.dat file into the original environment, open it, then make the mods to default cash account settings of the portfolio?

Thanks again
Paul

[Mark]

Hi Paul,

Great, glad you got it worked out. Yes, you can do exactly as you described. Just copy over the cash.dat, and from within FM open the investment. Finally, edit your default cash account assignment in the sub-portfolio's properties.

[P.G]

Hi Mark -

Yes it all worked except for one account I'm struggling with. I've a broker with a sterling denominated 'base account' that I fund with GBP. I use some of this to buy a lump of foreign exchange. With the (say) USD I would buy stocks which are priced, settle and distribute in USD (in other words any sales or distributions add to my holding of that foreign currency).

How would I construct something to replicate this. Have one sub-portfolio with a different cash account for each currency? How would you then handle the purchase of foreign exchange - which would be a movement from one portfolio to another?

Maybe I should just play around with it a bit?
Thanks again
PG

[Mark]

Hi PG,

Yes, exactly, you would want one sub-portfolio for each currency. Have the appropriate default cash account and the investments that use that default cash account located in that sub-portfolio. When you want to transfer GBP to USD this would be a sell in GBP and a buy in USD.

[P.G]

Hi Mark,

Thanks once again for your help so-far. There's one (hopefully last) type of transaction I'm having trouble accounting for.

I've an account in £s that I buy stocks on overseas markets with. I for e.g. buy £1000 work of say Intel, the broker does the FX conversion - at a rate of their own choosing - and buys the stock in USD for me. It sits in my portfolio in USD. I know how to I can track its day to day value which depends on the current exchange rate by following some notes in your documentation.

The dividends are paid to me in USD and are converted at a rate of the brokers choosing. The resulting pounds are credited to my account. Can you tell me how I go about having a security that is denominated in one currency (and so fluctuates) but generates a fixed dividend in a separate currency (and so doesn't mess up my cash accounting).

thanks again
PG

[Mark]

Hi P.G.,

You record the dividends in the currency of the investment. You can then either:

1) Record the cash deposit in a cash account of that same currency, plus a sell of that currency, and a buy of your currency.

or

2) Record the converted cash deposit into your currency.

If you use option #2, you may not want to use the default cash account feature, and just manually record both sides of the transaction, so you can control the exchange rate.