Quicken Community is moving to Single Sign On! Starting 1/22/21, you'll sign in to the community with your Quicken ID. For more information: http://bit.ly/CommunitySSO

Amount invested should decrease by the amount paid for shares sold

Rocket J Squirrel
Rocket J Squirrel SuperUser, Windows Beta ✭✭✭✭✭
edited October 2020 in Investing (Windows)
It took me a while to decide, but here's my Top 10 legacy bug. This one is as old as the hills.

Per Quicken Help,

Amount invested doesn't decrease when you sell shares (unless you sell all shares of a given security—then it goes to zero), whereas cost basis does. If calculations such as ROI appear lower than you would expect, it could be because the amount invested includes the cost of shares you no longer own.

Amount Invested should decrease by the amount paid for the shares that were sold. By failing to decrease Amount Invested upon sales, every single calculation in Quicken which starts with the word Return becomes inaccurate for any security which has been partially sold.

One might call this "working as designed." There is probably some old retired Quicken programmer who can explain why Amount Invested works this way. I sure can't remember why it does. I call it a bug, and a serious one.
Note: This conversation was created from a reply on: QWin: Make Fixing Existing Bugs a Priority- Top 10 Legacy Bugs Quicken Ignores.
Quicken user since version 2 for DOS, now using QWin Premier Subscription on Win10 Pro.

Comments

  • markus1957
    markus1957 SuperUser, Windows Beta Beta
    edited January 2019
    Looking at an investment transactions report, it would appear the Help file may need updating rather than the calculation. Each Sold transaction shows a decrease in the Amount Invested column. What I did notice is that the last column "Cash + Amount Invested" does not display unless you customize and click Reset in columns to display. Can anyone else confirm the report behavior?
  • Rocket J Squirrel
    Rocket J Squirrel SuperUser, Windows Beta ✭✭✭✭✭
    edited October 2018
    It shows in reports but not in Return statistics.
    Quicken user since version 2 for DOS, now using QWin Premier Subscription on Win10 Pro.
  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    edited May 2018
    The issue I see with decrementing AI as the original shares are sold -- What happens when that reaches $0 and you still have shares = market value?  That is consider this:  You buy shares and continue to reinvest dividends over 20, 30 years.  Maybe your total reinvested shares are about the same quantity as the original number of shares.  You chose to sell those original shares for whatever reason keeping the reinvested shares.  Now you have all these shares acquired by reinvestments, but you have no Amount Invested in them.  Your AI is $0.  

    How is Quicken suppose to compute ROI (for example) -- Return / Amount Invested = Return / $0 does not compute.  

    Amount Invested is a bogus parameter.  Except for the fact that it is deeply ingrained within the program and some users mental state, I would prefer it to be dropped completely -- removed.  Average Annual Return aka IRR is a much more sound mathematical calculation that does not require AI.    
  • markus1957
    markus1957 SuperUser, Windows Beta Beta
    edited January 2019
    Maybe I'm dense but I'm just not seeing any issues with "returns" in any of the screens or reports I use to track them. They always seem to match within reason those provide by the FI and my back of the envelope calculations.

    Regarding the specific example of reinvested dividends, the Investing Transactions report increments an amount invested for each reinvest transaction. It looks to me like "Amount Invested" is Quicken's means of tabulating cost basis. With the exception of certain Return of Capital conditions, I've found cost basis to be pretty accurate. A few Investing Transactions test report runs for a couple of holdings seemed to validate the cost basis value reported in Quicken and the FI.

    Again I must be missing something.
  • Rocket J Squirrel
    Rocket J Squirrel SuperUser, Windows Beta ✭✭✭✭✭
    edited October 2018
    Amount Invested is not Cost Basis. Amount Invested does not increase with reinvested dividends. Cost Basis does. Cost Basis is fine in Quicken. Amount Invested is bogus, but all the Return calculations depend on it.

    If you haven't sold any shares of a security, or if you sell all shares of a security, Amount Invested is correct. It's when you sell some, but not all, shares that Amount Invested becomes incorrect.
    Quicken user since version 2 for DOS, now using QWin Premier Subscription on Win10 Pro.
  • markus1957
    markus1957 SuperUser, Windows Beta Beta
    edited January 2019
    You keep saying that but every mutual fund or security I've checked so far with an Investment Transaction report set for All Dates, reports an Amount Invested total that exactly matches the Cost Basis value of the holding. The test runs were with holdings specifically chosen that had partial sales or reinvested dividends and sometimes both. 

    The Amount Invested column displayed in the Quicken Investment Transaction report is the same as the Cost Basis. I'm not clear on exactly what view in Quicken displays the issue being discussed. The performance reports and views in the investment tab all appear accurate for rates of return. We apparently have a failure to communicate.
  • Unknown
    Unknown Member
    edited October 2018
    I just tried an experiment.  I happen to have a dividend paid on a security on 12/2/2016 (which were reinvested), so what I did is first put in the column Amount Invested in the Portfolio view.

    Then I looked at how many shares I had on 12/1/2016, and I put in a sell for all those shared on 12/3/2016 (FIFO).

    So I looked at the Amount Invested on 12/1/2016, and then I looked that amount for 12/2/2016, and it hadn't changed.  If I look at it on the investment transaction report it does show an "Amount Invested" equal to the value of the dividend.

    But that increase never made it to Amount Invested on the portfolio view.
    What's more on 12/3/2016 after the sale the amount invested still didn't change.

    Note that the cost basis did change on each of these dates, for the amount exactly what was expected (go up by the dividend amount on 12/2/2016, and go down to only the dividend amount on 12/3/2016)

    So what I gather from this is that the Amount Invested on the portfolio view isn't what Amount Invested is on the investment transaction report.

    And that the Amount Invested on the portfolio view doesn't include reinvested funds, and it doesn't go down for sells until the full position is closed out.

    That last part is done because the portfolio view is setup so that as long as you hold a position it is going to give you the total historical income and return on it.
  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    edited May 2018
    This discussion is venturing into the post-hijack territory, so perhaps I can add one for comment before someone decides to fork it off to its own discussion.  

    The underlying issue is not the Investment transactions report.  It is in the Amount Invested parameter available through the portfolio view presentations.  Essentially, the Amount Invested portfolio view parameter is NOT using the data shown in the Amount Invested column of the Investment Transactions report to determine its value.  That is where markus1957 has a misunderstanding (I think). 

    Indeed, as I further recall, the portfolio view value is not even a static value; for the same "As of" date, Amount Invested can be presented as different amounts; it is dependent on the option setting for "Show Return calculations from ... ".  If that starting date is not "Earliest" then Amount Invested becomes the initialized with the market value on that starting date.  If you owned 100 shares of Apple on 1/1/17 and are asking for return values based on Earliest, Amount Invested may show as what you paid for it.  Change the setting to 1/1/17 and Amount Invested becomes the market value at close on 12/31/16 (as best I recall, or may be the 1/1/17 close).  

    I think the way to understand the thinking is that Quicken is looking to see how much you have dumped into that Apple (any security) pot over the selected time period.  In parallel, the Return is what you have taken out of the pot.  You may have dumped in dollars once at the beginning and sat on it.  You may have dumped in dollar-cost averaging money every quarter.  You may have bought and sold multiple times buying low and selling high trading on the cyclical nature.  But the basic picture Quicken is showing is that over that selected period of time, you opted to put in so many total dollars and that is your (its) Amount Invested.  

    So yes, I am saying it is working as designed.  I am not of the opinion it is a bug.  I am not condoning or supporting that design.  The design is not what users expect and it is not clearly explained or understood. 
  • Ducksoup_SD
    Ducksoup_SD Member ✭✭
    edited April 2017
    In my portfolio, the financial institution (Vanguard) requires that transferred dollars-in go through a money-market account before being able to purchase mutual fund shares.  So, in the Portfolio view, the Amount Invested shows the initial MM account PLUS the amount of any new mutual shares that were purchased using the MM account.  My "Amount Invested" for the account shows 2X what I really put into the account because it doesn't understand that the MM funds are used for purchasing everything else.  It clearly doesn't subtract the amount the MM fund was reduced by to increase the fund shares.  It treats every dollar in, no matter what source, as Amount Invested, and never decreases the Amount Invested, even when the dollars were simply moved from another share account.  Showing me 2X the actual dollars invested is a bug, no matter what the spin.  If you moved money routinely between multiple funds, you could probably get 3X, 4X, or more Amount Invested dollars, even though you never added a dime.
  • markus1957
    markus1957 SuperUser, Windows Beta Beta
    edited January 2019
    OK, I get it now. I just have never paid attention to that view, other than to see it's not of much value. My Investment tab, Portfolio view is set to display the Value option. It does not display "Amount Invested" or ROI columns. The major discrepancy I see is that "Amount Invested" columns in the Reports are not consistent with "Amount Invested" columns in Portfolio. Quicken should just strip that goofy "Amount Invested" logic out of the code and delete those View options. Amount Invested should always equal cost basis just as the Transaction report shows currently.  As Duck Soup points out there is no way those MMF pass-trough's will ever be accommodated to anyone's liking.
  • Unknown
    Unknown Member
    edited October 2018
    I find the investment portfolio view extremely useful, in fact it is my "go to place" for most of my investment information.  But there are definitely "columns" that are basically useless, and then there are others that are only useful for some kinds of securities and not others.  And in some cases, they don't overlap.  Meaning that I have not found one that I can really apply to all my securities and get a good "overall performance".

    And I think for the average person, calculations like this where you basically have to know all the ins and out to even attempt to use them, shouldn't be there.  They cause more harm than good.
  • Rocket J Squirrel
    Rocket J Squirrel SuperUser, Windows Beta ✭✭✭✭✭
    edited October 2018
    @markus1957 "Amount Invested should always equal cost basis" is absolutely wrong. Please try not to confuse others reading this thread. Read the Quicken Help:

    Amount invested is the actual dollar amount that you've invested in a security

    to date. Amount invested includes any expenses (such as commissions and fees)

    for that security. It does not include reinvested amounts, such as reinvested

    dividends, interest, or capital gains distributions. ... Amount invested doesn't decrease when you sell shares (unless you sell all

    shares of a given security—then it goes to zero), whereas cost basis does.

    Cost basis equals the total cost to you of a security you purchased. It includes

    commissions, fees, and mutual fund loads. It also includes all purchases, even

    reinvestments of dividends and capital gains distributions. However, it excludes

    the cost of any shares you've sold or given away. Also, it is reduced in a

    return-of-capital transaction.
    Quicken user since version 2 for DOS, now using QWin Premier Subscription on Win10 Pro.
  • markus1957
    markus1957 SuperUser, Windows Beta Beta
    edited January 2019
    Point taken. To avoid confusion regarding the use of the term "Amount Invested" in Quicken.

    1. The sum of values listed in the "Amount Invested" column for ALL Quicken Reports IS Equal to "Cost Basis" and not as described in the Help files.

    2. The sum of values listed in the "Amount Invested" column available for display in the Investment tab, Portfolio view is mathematically corrupt for most investment accounts because it counts the same investment dollar multiple times. The only condition under which it provides a mathematically sound value is when securities in an account are purchased and held for life.


    Adding- To the original Reply;  "By failing to decrease Amount Invested upon sales, every single calculation in Quicken which starts with the word Return becomes inaccurate for any security which has been partially sold."  is true for the specific case for calculations which "start with the word Return". But, calculations under columns that END with the word Return, e.g.; IRR, 1-year Return, 3-year Return, 5-year Return, Annual Rate of Return, are calculated correctly. They do not use the corrupt math used to calculate ROI's in Quicken.
  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    edited October 2018
    For several days, I've been searching the cogent explanation for what Quicken is doing with Amount Invested.  I have reviewed the glossary definitions and identified deficiencies therein.  I have run a series of test transactions around in my sandbox file.  I have reviewed transactions and data in my real file.  All this applies specifically to the portfolio view presentations.  I have only worked with regular brokerage accounts, though I expect everything to apply in retirement accounts as well.  Employee stock option situations could vary - I have no experience with them.  Also all based on QW2014 as of tonight.  Here goes.

    Quicken treats each security as its own pot.  Cash goes in (becoming Amount Invested).  Cash comes out from dividends, sales, etc.  Market value varies.  All those factors lead to a return.  

    All these can be assessed over a limited defined time frame (YTD, 1-year, 3-year, or 5-year), over a user defined period (user specified start date through Options / Portfolio Preference), or for all time (user specified Earliest through Options / Portfolio Preference).  The ending date is controlled through the As of date for the portfolio view.  

    image

    Amount
    Invested should be considered in context with Return and Market Value in that per the return definition:
    • Return = Market
      Value + Income taken out + Sales proceeds taken out – Amount Invested

    This might even
    get rewritten as:

    ·        
    Market Value

    ·        
    + Cash Taken Out (Dividends, Sale Proceeds, etc.)

    ·        
    – Amount Invested

    ·        
    = Return

    Market Value is straight forward:  Price/share x Number of shares As of date for the view.  This value is directly tied to the number of shares on that date.  

    Cash Taken Out -- more complex.  The Income taken out is cash
    received as attributed to the security including dividends, interest, capital
    gain distributions, positive-value return of capital, and miscellaneous income
    less miscellaneous expense transactions.  All those transactions might occur at any point during the period.  There might be any number of shares held at the time of those transactions.  There is no direct relationship between the shares at the time of the transactions and the shares held when the Market Value is computed (the As of date).

    The Sales proceeds taken out are the total proceeds from sales after commissions are paid
    and would include both regular sales and short-sales transactions.  These are not gain/loss figures but include gain/loss and basis associated with the sale = cash proceeds.  The sales transactions can clearly occur at any time during the period.  These transactions obviously are not associated with the ending shares.  

    The Amount invested is likewise somewhat complex.  Amount
    invested is the actual dollar amount that you have invested in a security - the total you have put into the pot over the time frame of interest.  Amount invested includes commissions on the acquisition
    of the shares of that security.  It does
    not include reinvested amounts, such as reinvested dividends, interest, or
    capital gains distributions.  Amount
    invested starts with the Market Value at the specified beginning date (Earliest
    Date by default, or another date through the Portfolio Preferences option, or based in the pre-defined period such as YTD) and
    adds to that amount for later transactions: 1) cost basis of Buy Shares
    transactions, 2) cost basis of Add Share transactions, 3) value of Cover Short
    transactions, and 4) value of any negative-value Return of Capital transactions
    (added as a positive addition to the Amount Invested).

    I should note that while Amount Invested includes cost basis of Shares Added, the Cash taken out does not include the cost basis of Shares Removed.  I consider that an error and a deficiency.

    So you put cash in, you take cash out, the market value varies.  Over a period of time you get a return.  That is the picture Quicken is working from.

    Given that understanding of how the numbers are being used, I believe it would be a mistake to decrement Amount Invested for sold shares.

    The major underlying issue here is that Quicken is providing information as if the security is one big pot in which shares have varied over time.  Quicken is reporting based on that time span.  Users are trying to interpret Amount Invested as the amount they have invested in the shares they currently own on that As of date.  They are treating it as a snapshot in time.  

    I would not have any problem seeing a different parameter developed more in line with users expectations, but I am pretty happy with cost basis being such a better metric.  I don't think such as development is easy as it might first appear.  Indeed, all those other various contributions would need to be assessed.    

    Final thought:  This treatment of Return and Amount Invested goes back a long, long time; perhaps to Scott Cook's kitchen table.  Maybe if this found its way to him, he might remember and confirm.     

    PS:  Based on my investigation, I would like to see the definitions for the two groups of Amount Invested to be revised as follows.  The existing definition for the YTD et al versions is seriously in error:

    Amount Invested – Amount invested is the actual dollar
    amount that you have invested in a security.  Amount invested includes commissions on the acquisition
    of the shares of that security.  It does
    not include reinvested amounts, such as reinvested dividends, interest, or
    capital gains distributions.  Amount
    invested starts with the Market Value at the specified beginning date (Earliest
    Date by default, or another date through the Portfolio Preferences option) and
    adds to that amount for later transactions: 1) cost basis of Buy Shares
    transactions, 2) cost basis of Add Share transactions, 3) value of Cover Short
    transactions, and 4) value of any negative-value Return of Capital transactions
    (added as a positive addition to the Amount Invested). 

    Amount Invested YTD, etc. – These Amount invested values
    are the actual dollar amount that you have invested in a security through a
    limited period of time.  Amount invested
    includes commissions on the acquisition of the shares of that security. It does
    not include reinvested amounts, such as reinvested dividends, interest, or
    capital gains distributions.  Amount
    invested starts with the Market Value at the specified beginning date (Calendar
    YTD, or 1-year, 3-years, or 5-years before the view-specified As of date) and
    adds to that amount for later transactions: 1) cost basis of Buy Shares
    transactions, 2) cost basis of Add Share transactions, 3) value of Cover Short
    transactions, and 4) value of any negative-value Return of Capital transactions
    (added as a positive addition to the Amount Invested).  Further, these parameters require a position
    of value be held in the security on the applicable starting date.  If a valued position is not held on the
    applicable starting date, NA will be returned.


  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    edited April 2017
    q.lurker said:

    For several days, I've been searching the cogent explanation for what Quicken is doing with Amount Invested.  I have reviewed the glossary definitions and identified deficiencies therein.  I have run a series of test transactions around in my sandbox file.  I have reviewed transactions and data in my real file.  All this applies specifically to the portfolio view presentations.  I have only worked with regular brokerage accounts, though I expect everything to apply in retirement accounts as well.  Employee stock option situations could vary - I have no experience with them.  Also all based on QW2014 as of tonight.  Here goes.

    Quicken treats each security as its own pot.  Cash goes in (becoming Amount Invested).  Cash comes out from dividends, sales, etc.  Market value varies.  All those factors lead to a return.  

    All these can be assessed over a limited defined time frame (YTD, 1-year, 3-year, or 5-year), over a user defined period (user specified start date through Options / Portfolio Preference), or for all time (user specified Earliest through Options / Portfolio Preference).  The ending date is controlled through the As of date for the portfolio view.  

    image

    Amount
    Invested should be considered in context with Return and Market Value in that per the return definition:

    • Return = Market
      Value + Income taken out + Sales proceeds taken out – Amount Invested

    This might even
    get rewritten as:

    ·        
    Market Value

    ·        
    + Cash Taken Out (Dividends, Sale Proceeds, etc.)

    ·        
    – Amount Invested

    ·        
    = Return

    Market Value is straight forward:  Price/share x Number of shares As of date for the view.  This value is directly tied to the number of shares on that date.  

    Cash Taken Out -- more complex.  The Income taken out is cash
    received as attributed to the security including dividends, interest, capital
    gain distributions, positive-value return of capital, and miscellaneous income
    less miscellaneous expense transactions.  All those transactions might occur at any point during the period.  There might be any number of shares held at the time of those transactions.  There is no direct relationship between the shares at the time of the transactions and the shares held when the Market Value is computed (the As of date).

    The Sales proceeds taken out are the total proceeds from sales after commissions are paid
    and would include both regular sales and short-sales transactions.  These are not gain/loss figures but include gain/loss and basis associated with the sale = cash proceeds.  The sales transactions can clearly occur at any time during the period.  These transactions obviously are not associated with the ending shares.  

    The Amount invested is likewise somewhat complex.  Amount
    invested is the actual dollar amount that you have invested in a security - the total you have put into the pot over the time frame of interest.  Amount invested includes commissions on the acquisition
    of the shares of that security.  It does
    not include reinvested amounts, such as reinvested dividends, interest, or
    capital gains distributions.  Amount
    invested starts with the Market Value at the specified beginning date (Earliest
    Date by default, or another date through the Portfolio Preferences option, or based in the pre-defined period such as YTD) and
    adds to that amount for later transactions: 1) cost basis of Buy Shares
    transactions, 2) cost basis of Add Share transactions, 3) value of Cover Short
    transactions, and 4) value of any negative-value Return of Capital transactions
    (added as a positive addition to the Amount Invested).

    I should note that while Amount Invested includes cost basis of Shares Added, the Cash taken out does not include the cost basis of Shares Removed.  I consider that an error and a deficiency.

    So you put cash in, you take cash out, the market value varies.  Over a period of time you get a return.  That is the picture Quicken is working from.

    Given that understanding of how the numbers are being used, I believe it would be a mistake to decrement Amount Invested for sold shares.

    The major underlying issue here is that Quicken is providing information as if the security is one big pot in which shares have varied over time.  Quicken is reporting based on that time span.  Users are trying to interpret Amount Invested as the amount they have invested in the shares they currently own on that As of date.  They are treating it as a snapshot in time.  

    I would not have any problem seeing a different parameter developed more in line with users expectations, but I am pretty happy with cost basis being such a better metric.  I don't think such as development is easy as it might first appear.  Indeed, all those other various contributions would need to be assessed.    

    Final thought:  This treatment of Return and Amount Invested goes back a long, long time; perhaps to Scott Cook's kitchen table.  Maybe if this found its way to him, he might remember and confirm.     

    PS:  Based on my investigation, I would like to see the definitions for the two groups of Amount Invested to be revised as follows.  The existing definition for the YTD et al versions is seriously in error:

    Amount Invested – Amount invested is the actual dollar
    amount that you have invested in a security.  Amount invested includes commissions on the acquisition
    of the shares of that security.  It does
    not include reinvested amounts, such as reinvested dividends, interest, or
    capital gains distributions.  Amount
    invested starts with the Market Value at the specified beginning date (Earliest
    Date by default, or another date through the Portfolio Preferences option) and
    adds to that amount for later transactions: 1) cost basis of Buy Shares
    transactions, 2) cost basis of Add Share transactions, 3) value of Cover Short
    transactions, and 4) value of any negative-value Return of Capital transactions
    (added as a positive addition to the Amount Invested). 

    Amount Invested YTD, etc. – These Amount invested values
    are the actual dollar amount that you have invested in a security through a
    limited period of time.  Amount invested
    includes commissions on the acquisition of the shares of that security. It does
    not include reinvested amounts, such as reinvested dividends, interest, or
    capital gains distributions.  Amount
    invested starts with the Market Value at the specified beginning date (Calendar
    YTD, or 1-year, 3-years, or 5-years before the view-specified As of date) and
    adds to that amount for later transactions: 1) cost basis of Buy Shares
    transactions, 2) cost basis of Add Share transactions, 3) value of Cover Short
    transactions, and 4) value of any negative-value Return of Capital transactions
    (added as a positive addition to the Amount Invested).  Further, these parameters require a position
    of value be held in the security on the applicable starting date.  If a valued position is not held on the
    applicable starting date, NA will be returned.


    I thought I'd follow up with a quick example demonstrating an aspect of the difference decrementing the Amount Invested might make.

    Consider the following transactions:
    Buy 50 shares @ 10 = 500
    Buy 50 shares @ 10 = 500
    Div @ 0.25/sh ======   25
    Sold 50 shares @ 12 = 600
    Div @ 0.30/sh ======    15
    Holding 50 shares @ 14 = 700

    Applying the model from above I have
      MV ====   700
    + Div ====    40
    + Sales === 600 (full proceeds)
    - AmtInv= -1000 (not adjusted for sales)
    Return === $340 >>>> ROI = 340/1000

    If you treat the Sale proceeds as gain/loss and deduct the basis from the Amount Invested the math becomes
      MV ====   700
    + Div ====    40
    + Sales === 100 (gain loss only)
    - AmtInv= -  500 (sold basis deducted)
    Return === $340 >>>> ROI = 340/500

    Return is not altered,but ROI is very different.
    Also, those 50 shares remaining did not produce that return.  Other shares did.  I think that is the sort of thing and thinking the original programmer saw. 
  • Unknown
    Unknown Member
    edited April 2017
    q.lurker said:

    For several days, I've been searching the cogent explanation for what Quicken is doing with Amount Invested.  I have reviewed the glossary definitions and identified deficiencies therein.  I have run a series of test transactions around in my sandbox file.  I have reviewed transactions and data in my real file.  All this applies specifically to the portfolio view presentations.  I have only worked with regular brokerage accounts, though I expect everything to apply in retirement accounts as well.  Employee stock option situations could vary - I have no experience with them.  Also all based on QW2014 as of tonight.  Here goes.

    Quicken treats each security as its own pot.  Cash goes in (becoming Amount Invested).  Cash comes out from dividends, sales, etc.  Market value varies.  All those factors lead to a return.  

    All these can be assessed over a limited defined time frame (YTD, 1-year, 3-year, or 5-year), over a user defined period (user specified start date through Options / Portfolio Preference), or for all time (user specified Earliest through Options / Portfolio Preference).  The ending date is controlled through the As of date for the portfolio view.  

    image

    Amount
    Invested should be considered in context with Return and Market Value in that per the return definition:

    • Return = Market
      Value + Income taken out + Sales proceeds taken out – Amount Invested

    This might even
    get rewritten as:

    ·        
    Market Value

    ·        
    + Cash Taken Out (Dividends, Sale Proceeds, etc.)

    ·        
    – Amount Invested

    ·        
    = Return

    Market Value is straight forward:  Price/share x Number of shares As of date for the view.  This value is directly tied to the number of shares on that date.  

    Cash Taken Out -- more complex.  The Income taken out is cash
    received as attributed to the security including dividends, interest, capital
    gain distributions, positive-value return of capital, and miscellaneous income
    less miscellaneous expense transactions.  All those transactions might occur at any point during the period.  There might be any number of shares held at the time of those transactions.  There is no direct relationship between the shares at the time of the transactions and the shares held when the Market Value is computed (the As of date).

    The Sales proceeds taken out are the total proceeds from sales after commissions are paid
    and would include both regular sales and short-sales transactions.  These are not gain/loss figures but include gain/loss and basis associated with the sale = cash proceeds.  The sales transactions can clearly occur at any time during the period.  These transactions obviously are not associated with the ending shares.  

    The Amount invested is likewise somewhat complex.  Amount
    invested is the actual dollar amount that you have invested in a security - the total you have put into the pot over the time frame of interest.  Amount invested includes commissions on the acquisition
    of the shares of that security.  It does
    not include reinvested amounts, such as reinvested dividends, interest, or
    capital gains distributions.  Amount
    invested starts with the Market Value at the specified beginning date (Earliest
    Date by default, or another date through the Portfolio Preferences option, or based in the pre-defined period such as YTD) and
    adds to that amount for later transactions: 1) cost basis of Buy Shares
    transactions, 2) cost basis of Add Share transactions, 3) value of Cover Short
    transactions, and 4) value of any negative-value Return of Capital transactions
    (added as a positive addition to the Amount Invested).

    I should note that while Amount Invested includes cost basis of Shares Added, the Cash taken out does not include the cost basis of Shares Removed.  I consider that an error and a deficiency.

    So you put cash in, you take cash out, the market value varies.  Over a period of time you get a return.  That is the picture Quicken is working from.

    Given that understanding of how the numbers are being used, I believe it would be a mistake to decrement Amount Invested for sold shares.

    The major underlying issue here is that Quicken is providing information as if the security is one big pot in which shares have varied over time.  Quicken is reporting based on that time span.  Users are trying to interpret Amount Invested as the amount they have invested in the shares they currently own on that As of date.  They are treating it as a snapshot in time.  

    I would not have any problem seeing a different parameter developed more in line with users expectations, but I am pretty happy with cost basis being such a better metric.  I don't think such as development is easy as it might first appear.  Indeed, all those other various contributions would need to be assessed.    

    Final thought:  This treatment of Return and Amount Invested goes back a long, long time; perhaps to Scott Cook's kitchen table.  Maybe if this found its way to him, he might remember and confirm.     

    PS:  Based on my investigation, I would like to see the definitions for the two groups of Amount Invested to be revised as follows.  The existing definition for the YTD et al versions is seriously in error:

    Amount Invested – Amount invested is the actual dollar
    amount that you have invested in a security.  Amount invested includes commissions on the acquisition
    of the shares of that security.  It does
    not include reinvested amounts, such as reinvested dividends, interest, or
    capital gains distributions.  Amount
    invested starts with the Market Value at the specified beginning date (Earliest
    Date by default, or another date through the Portfolio Preferences option) and
    adds to that amount for later transactions: 1) cost basis of Buy Shares
    transactions, 2) cost basis of Add Share transactions, 3) value of Cover Short
    transactions, and 4) value of any negative-value Return of Capital transactions
    (added as a positive addition to the Amount Invested). 

    Amount Invested YTD, etc. – These Amount invested values
    are the actual dollar amount that you have invested in a security through a
    limited period of time.  Amount invested
    includes commissions on the acquisition of the shares of that security. It does
    not include reinvested amounts, such as reinvested dividends, interest, or
    capital gains distributions.  Amount
    invested starts with the Market Value at the specified beginning date (Calendar
    YTD, or 1-year, 3-years, or 5-years before the view-specified As of date) and
    adds to that amount for later transactions: 1) cost basis of Buy Shares
    transactions, 2) cost basis of Add Share transactions, 3) value of Cover Short
    transactions, and 4) value of any negative-value Return of Capital transactions
    (added as a positive addition to the Amount Invested).  Further, these parameters require a position
    of value be held in the security on the applicable starting date.  If a valued position is not held on the
    applicable starting date, NA will be returned.


    Just one small note, the "pot" isn't exactly just a security.  It is the security and its account.
    I can have the same security in a different account, and it won't affect any other account's calculations from what I have seen.

    Also I imagine that no matter how wrong we consider it, if they were to change it now there would be complaints from a lot of people who have come to expect this wrong behavior.
  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    edited April 2017
    q.lurker said:

    For several days, I've been searching the cogent explanation for what Quicken is doing with Amount Invested.  I have reviewed the glossary definitions and identified deficiencies therein.  I have run a series of test transactions around in my sandbox file.  I have reviewed transactions and data in my real file.  All this applies specifically to the portfolio view presentations.  I have only worked with regular brokerage accounts, though I expect everything to apply in retirement accounts as well.  Employee stock option situations could vary - I have no experience with them.  Also all based on QW2014 as of tonight.  Here goes.

    Quicken treats each security as its own pot.  Cash goes in (becoming Amount Invested).  Cash comes out from dividends, sales, etc.  Market value varies.  All those factors lead to a return.  

    All these can be assessed over a limited defined time frame (YTD, 1-year, 3-year, or 5-year), over a user defined period (user specified start date through Options / Portfolio Preference), or for all time (user specified Earliest through Options / Portfolio Preference).  The ending date is controlled through the As of date for the portfolio view.  

    image

    Amount
    Invested should be considered in context with Return and Market Value in that per the return definition:

    • Return = Market
      Value + Income taken out + Sales proceeds taken out – Amount Invested

    This might even
    get rewritten as:

    ·        
    Market Value

    ·        
    + Cash Taken Out (Dividends, Sale Proceeds, etc.)

    ·        
    – Amount Invested

    ·        
    = Return

    Market Value is straight forward:  Price/share x Number of shares As of date for the view.  This value is directly tied to the number of shares on that date.  

    Cash Taken Out -- more complex.  The Income taken out is cash
    received as attributed to the security including dividends, interest, capital
    gain distributions, positive-value return of capital, and miscellaneous income
    less miscellaneous expense transactions.  All those transactions might occur at any point during the period.  There might be any number of shares held at the time of those transactions.  There is no direct relationship between the shares at the time of the transactions and the shares held when the Market Value is computed (the As of date).

    The Sales proceeds taken out are the total proceeds from sales after commissions are paid
    and would include both regular sales and short-sales transactions.  These are not gain/loss figures but include gain/loss and basis associated with the sale = cash proceeds.  The sales transactions can clearly occur at any time during the period.  These transactions obviously are not associated with the ending shares.  

    The Amount invested is likewise somewhat complex.  Amount
    invested is the actual dollar amount that you have invested in a security - the total you have put into the pot over the time frame of interest.  Amount invested includes commissions on the acquisition
    of the shares of that security.  It does
    not include reinvested amounts, such as reinvested dividends, interest, or
    capital gains distributions.  Amount
    invested starts with the Market Value at the specified beginning date (Earliest
    Date by default, or another date through the Portfolio Preferences option, or based in the pre-defined period such as YTD) and
    adds to that amount for later transactions: 1) cost basis of Buy Shares
    transactions, 2) cost basis of Add Share transactions, 3) value of Cover Short
    transactions, and 4) value of any negative-value Return of Capital transactions
    (added as a positive addition to the Amount Invested).

    I should note that while Amount Invested includes cost basis of Shares Added, the Cash taken out does not include the cost basis of Shares Removed.  I consider that an error and a deficiency.

    So you put cash in, you take cash out, the market value varies.  Over a period of time you get a return.  That is the picture Quicken is working from.

    Given that understanding of how the numbers are being used, I believe it would be a mistake to decrement Amount Invested for sold shares.

    The major underlying issue here is that Quicken is providing information as if the security is one big pot in which shares have varied over time.  Quicken is reporting based on that time span.  Users are trying to interpret Amount Invested as the amount they have invested in the shares they currently own on that As of date.  They are treating it as a snapshot in time.  

    I would not have any problem seeing a different parameter developed more in line with users expectations, but I am pretty happy with cost basis being such a better metric.  I don't think such as development is easy as it might first appear.  Indeed, all those other various contributions would need to be assessed.    

    Final thought:  This treatment of Return and Amount Invested goes back a long, long time; perhaps to Scott Cook's kitchen table.  Maybe if this found its way to him, he might remember and confirm.     

    PS:  Based on my investigation, I would like to see the definitions for the two groups of Amount Invested to be revised as follows.  The existing definition for the YTD et al versions is seriously in error:

    Amount Invested – Amount invested is the actual dollar
    amount that you have invested in a security.  Amount invested includes commissions on the acquisition
    of the shares of that security.  It does
    not include reinvested amounts, such as reinvested dividends, interest, or
    capital gains distributions.  Amount
    invested starts with the Market Value at the specified beginning date (Earliest
    Date by default, or another date through the Portfolio Preferences option) and
    adds to that amount for later transactions: 1) cost basis of Buy Shares
    transactions, 2) cost basis of Add Share transactions, 3) value of Cover Short
    transactions, and 4) value of any negative-value Return of Capital transactions
    (added as a positive addition to the Amount Invested). 

    Amount Invested YTD, etc. – These Amount invested values
    are the actual dollar amount that you have invested in a security through a
    limited period of time.  Amount invested
    includes commissions on the acquisition of the shares of that security. It does
    not include reinvested amounts, such as reinvested dividends, interest, or
    capital gains distributions.  Amount
    invested starts with the Market Value at the specified beginning date (Calendar
    YTD, or 1-year, 3-years, or 5-years before the view-specified As of date) and
    adds to that amount for later transactions: 1) cost basis of Buy Shares
    transactions, 2) cost basis of Add Share transactions, 3) value of Cover Short
    transactions, and 4) value of any negative-value Return of Capital transactions
    (added as a positive addition to the Amount Invested).  Further, these parameters require a position
    of value be held in the security on the applicable starting date.  If a valued position is not held on the
    applicable starting date, NA will be returned.


    By account -- if you choose to group by account or customize to a single or lesser group of accounts. If not grouped by account, all those transactions from all applicable accounts get brought in together. So I imagine it as one big pot that can be broken into smaller pots.


    My real underlying realization is that it is not the amount invested and return for individual lots or just the current shares. Indeed, if you are grouped by account and expand to show the lots, Amount invested will not show for the individual lots, only for the security as a whole.
  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    edited April 2017
    q.lurker said:

    For several days, I've been searching the cogent explanation for what Quicken is doing with Amount Invested.  I have reviewed the glossary definitions and identified deficiencies therein.  I have run a series of test transactions around in my sandbox file.  I have reviewed transactions and data in my real file.  All this applies specifically to the portfolio view presentations.  I have only worked with regular brokerage accounts, though I expect everything to apply in retirement accounts as well.  Employee stock option situations could vary - I have no experience with them.  Also all based on QW2014 as of tonight.  Here goes.

    Quicken treats each security as its own pot.  Cash goes in (becoming Amount Invested).  Cash comes out from dividends, sales, etc.  Market value varies.  All those factors lead to a return.  

    All these can be assessed over a limited defined time frame (YTD, 1-year, 3-year, or 5-year), over a user defined period (user specified start date through Options / Portfolio Preference), or for all time (user specified Earliest through Options / Portfolio Preference).  The ending date is controlled through the As of date for the portfolio view.  

    image

    Amount
    Invested should be considered in context with Return and Market Value in that per the return definition:

    • Return = Market
      Value + Income taken out + Sales proceeds taken out – Amount Invested

    This might even
    get rewritten as:

    ·        
    Market Value

    ·        
    + Cash Taken Out (Dividends, Sale Proceeds, etc.)

    ·        
    – Amount Invested

    ·        
    = Return

    Market Value is straight forward:  Price/share x Number of shares As of date for the view.  This value is directly tied to the number of shares on that date.  

    Cash Taken Out -- more complex.  The Income taken out is cash
    received as attributed to the security including dividends, interest, capital
    gain distributions, positive-value return of capital, and miscellaneous income
    less miscellaneous expense transactions.  All those transactions might occur at any point during the period.  There might be any number of shares held at the time of those transactions.  There is no direct relationship between the shares at the time of the transactions and the shares held when the Market Value is computed (the As of date).

    The Sales proceeds taken out are the total proceeds from sales after commissions are paid
    and would include both regular sales and short-sales transactions.  These are not gain/loss figures but include gain/loss and basis associated with the sale = cash proceeds.  The sales transactions can clearly occur at any time during the period.  These transactions obviously are not associated with the ending shares.  

    The Amount invested is likewise somewhat complex.  Amount
    invested is the actual dollar amount that you have invested in a security - the total you have put into the pot over the time frame of interest.  Amount invested includes commissions on the acquisition
    of the shares of that security.  It does
    not include reinvested amounts, such as reinvested dividends, interest, or
    capital gains distributions.  Amount
    invested starts with the Market Value at the specified beginning date (Earliest
    Date by default, or another date through the Portfolio Preferences option, or based in the pre-defined period such as YTD) and
    adds to that amount for later transactions: 1) cost basis of Buy Shares
    transactions, 2) cost basis of Add Share transactions, 3) value of Cover Short
    transactions, and 4) value of any negative-value Return of Capital transactions
    (added as a positive addition to the Amount Invested).

    I should note that while Amount Invested includes cost basis of Shares Added, the Cash taken out does not include the cost basis of Shares Removed.  I consider that an error and a deficiency.

    So you put cash in, you take cash out, the market value varies.  Over a period of time you get a return.  That is the picture Quicken is working from.

    Given that understanding of how the numbers are being used, I believe it would be a mistake to decrement Amount Invested for sold shares.

    The major underlying issue here is that Quicken is providing information as if the security is one big pot in which shares have varied over time.  Quicken is reporting based on that time span.  Users are trying to interpret Amount Invested as the amount they have invested in the shares they currently own on that As of date.  They are treating it as a snapshot in time.  

    I would not have any problem seeing a different parameter developed more in line with users expectations, but I am pretty happy with cost basis being such a better metric.  I don't think such as development is easy as it might first appear.  Indeed, all those other various contributions would need to be assessed.    

    Final thought:  This treatment of Return and Amount Invested goes back a long, long time; perhaps to Scott Cook's kitchen table.  Maybe if this found its way to him, he might remember and confirm.     

    PS:  Based on my investigation, I would like to see the definitions for the two groups of Amount Invested to be revised as follows.  The existing definition for the YTD et al versions is seriously in error:

    Amount Invested – Amount invested is the actual dollar
    amount that you have invested in a security.  Amount invested includes commissions on the acquisition
    of the shares of that security.  It does
    not include reinvested amounts, such as reinvested dividends, interest, or
    capital gains distributions.  Amount
    invested starts with the Market Value at the specified beginning date (Earliest
    Date by default, or another date through the Portfolio Preferences option) and
    adds to that amount for later transactions: 1) cost basis of Buy Shares
    transactions, 2) cost basis of Add Share transactions, 3) value of Cover Short
    transactions, and 4) value of any negative-value Return of Capital transactions
    (added as a positive addition to the Amount Invested). 

    Amount Invested YTD, etc. – These Amount invested values
    are the actual dollar amount that you have invested in a security through a
    limited period of time.  Amount invested
    includes commissions on the acquisition of the shares of that security. It does
    not include reinvested amounts, such as reinvested dividends, interest, or
    capital gains distributions.  Amount
    invested starts with the Market Value at the specified beginning date (Calendar
    YTD, or 1-year, 3-years, or 5-years before the view-specified As of date) and
    adds to that amount for later transactions: 1) cost basis of Buy Shares
    transactions, 2) cost basis of Add Share transactions, 3) value of Cover Short
    transactions, and 4) value of any negative-value Return of Capital transactions
    (added as a positive addition to the Amount Invested).  Further, these parameters require a position
    of value be held in the security on the applicable starting date.  If a valued position is not held on the
    applicable starting date, NA will be returned.


    Onr other aspect just to confirm -- since the math is done on each security 'pot', what shows for the account when grouped by account is the total of all the applicable securities.  That is, there is not a separate Amount Invested value for the account tracking cash put into the account.  Some users have seemed to want that type of info as well.
This discussion has been closed.