Portfolio Value Report design gives misleading Gain/Loss information
Quicken Premier 16 - Running on Windows 10
I have noticed an issue with the way the Portfolio Value report calculates the
Gain / Loss column. My example is that I purchased a mutual fund on two
occasions in November 2016 for a total of $55,000. The fund distributed a
dividend of $3,589.46 in December 2016 that was reinvested. The current
value of the shares in this investment is $58,139.29
(market close 1/4/17). The Portfolio Value report is showing that I have
a LOSS of -450.17. The problem is that I actually have a
$3,589.46 GAIN ($55,000 investment vs $58,139.29 current value).
This reporting is very misleading and could very well result in bad decisions!
suggestion would be that the summary level Portfolio Value report should only
show Cost Basis as cost of any shares purchased less cost of any shares
sold. This would provide a more accurate
Gain/Loss when compared to the current value.
Details of dividends and other distributions could be viewed on the detailed
report available by clicking on the individual investment.
NotACPA SuperUser ✭✭✭✭✭Your understanding of basic accounting is incorrect.
You have a Cost Basis of $58,589.46 and, truly, a loss on the investment of $450.17.
That reinvested div ADDS to your cost basis, exactly the same as if the fund had sent you a check, and you returned it with instructions to "buy more"Q user since DOS version 5
Now running Quicken Windows Subscription, Home & Business
Retired "Certified Information Systems Auditor" & Bank Audit VP0
volvogirl SuperUser ✭✭✭✭✭"My suggestion would be that the summary level Portfolio Value report should only show Cost Basis as cost of any shares purchased less cost of any shares sold."
It does and is. You didn't just get the dividend. You PURCHASED more shares which adds to the cost. If you want to track it better then tell the mutual fund company to mail you a check for the dividend and you will reinvest it yourself.0
Tom Young SuperUser ✭✭✭✭✭This issue has been brought up many times and the answer provided by NotACPA is absolutely correct. You've paid taxes - or will pay taxes when you complete your 2016 income tax return - on that $3,589.46 so you sure as shootin' want that $3,589.46 counted as part of your basis!
According to your way of thinking if you sold that holding for $58,139.29 you'd have a taxable gain of $3,589.46, but you already paid tax on that $3,589.46 when you included that amount as "dividends" on your income tax return. I don't think you want to pay tax on that $3,589.46 twice!
In situations where dividends are reinvested the more precise and useful measure of a security's performance would be something like a Internal Rate of Return calculation.0