Best way to view contributions instead of cost basis?

KnnNike

I'm using Quicken Premier 2017 for Windows, and I have a question about getting an accurate sense of my investment performance. On the one hand, I could look at Market Value vs. Cost Basis. But that tends to underestimate my returns, since if I sell one set of shares that have appreciated, and buy a new set of a different stock, that higher dollar value becomes my new cost basis.

I was playing around with some the columns in the Investing > Portfolio view, and there is something called "Amount Invested" and "Amount Return". The "Amount Return" is indeed higher than the "Gain/Loss", which is based on the different between "Market Value" and "Cost Basis". However, for several of my accounts, "Amount Invested" is significantly higher than "Market Value", even though I've had positive returns, leading me to believe that this isn't quite what I'm looking for.

So in short, I'm looking for the best way to compare "Market Value" against "Contributions"...what's the best/easiest way to get that "Contributions" amount? Is that something I can get to show up in this Investing > Portfolio table?

Unknown

Do you want to include any reinvested dividends and capital gains as well?

KnnNike

I do not want those included in contributions. In a sense, I'm looking for a measure of how much "external" money I have put in vs. the total value of the account.

Unknown

KnnNike said:

I do not want those included in contributions. In a sense, I'm looking for a measure of how much "external" money I have put in vs. the total value of the account.

Don't know if this will work for you, but it's worth a try.

Reports > Investment Transactions.

Specify the start and end date.

Customize the report to only include BOUGHT and/or ADDED transactions (or whichever ACTIONS you need to include).  

Like I said, I'm not sure if this is the exact report you need...but you might be able to manipulate it to get what you need.  

q_lurker

getting an accurate sense of my investment performance. 

IMO, the best measure of overall performance Quicken offers is the Average Annual Return.  You can get that on portfolio views for YTD, 1-year, 3-year, and 5-year periods.  You can also get the value for any time period through an Investment Performance Report.  That metric also known as in Internal Rate of Return takes into account additions, withdrawals, and income transactions, taken and reinvested, although it may not be obvious, and it considers the timing of those transactions.  If looked at on an account basis, the trading out of one investment to another will be neutral - no impact.  More specific info about AAR is in the Quicken Help files.   

Amount Invested is a dubious value.  If you look at it from a trading aspect, it considers that you have, for example, bought Apple 3 times for $35,000 total.  The fact that you sold of 2 of those lots for profits and now hold one lot that you paid $10,000 for is not a factor.  Over the selected time period, you put $35K into Apple and took out some other value.  $35K is your amount invested.  It is not the Amount Invested in your current holding; it is the total amount you have invested in the relevant period.  

Another nuance with Amount Invested is that the value is dependent on the starting date (Options, Portfolio Preferences).  If the starting date is, say, 1/1/2016, your Amount Invested will be the value of your holding as of that date.  It is modelling that on that date, you opted to keep that amount invested in that security.  Effectively, you chose to invest that amount by choosing not to sell the holding.  Rational and reasonable, but not necessarily what people expect.

HTH  

KnnNike

q.lurker said:

getting an accurate sense of my investment performance. 

IMO, the best measure of overall performance Quicken offers is the Average Annual Return.  You can get that on portfolio views for YTD, 1-year, 3-year, and 5-year periods.  You can also get the value for any time period through an Investment Performance Report.  That metric also known as in Internal Rate of Return takes into account additions, withdrawals, and income transactions, taken and reinvested, although it may not be obvious, and it considers the timing of those transactions.  If looked at on an account basis, the trading out of one investment to another will be neutral - no impact.  More specific info about AAR is in the Quicken Help files.   

Amount Invested is a dubious value.  If you look at it from a trading aspect, it considers that you have, for example, bought Apple 3 times for $35,000 total.  The fact that you sold of 2 of those lots for profits and now hold one lot that you paid $10,000 for is not a factor.  Over the selected time period, you put $35K into Apple and took out some other value.  $35K is your amount invested.  It is not the Amount Invested in your current holding; it is the total amount you have invested in the relevant period.  

Another nuance with Amount Invested is that the value is dependent on the starting date (Options, Portfolio Preferences).  If the starting date is, say, 1/1/2016, your Amount Invested will be the value of your holding as of that date.  It is modelling that on that date, you opted to keep that amount invested in that security.  Effectively, you chose to invest that amount by choosing not to sell the holding.  Rational and reasonable, but not necessarily what people expect.

HTH  I guess that works if you're constantly moving money in/out of your investments, but these are long-term accounts that I won't be drawing down for at least a decade or more. I'll give your words some thought, thanks.

As an aside, I don't think there's a way to do YTD AAR, is there? I can see 1-/3-/5-year AARs, but if there was a YTD option for some of my most recent accounts, that would be very helpful as well. I understand that "YTD AAR" is a bit of a misnomer, but I guess you would just call it "YTD Return"

KnnNike

KnnNike said:

I do not want those included in contributions. In a sense, I'm looking for a measure of how much "external" money I have put in vs. the total value of the account.

Thanks, I'll look into it!

Tom Young

q.lurker said:

getting an accurate sense of my investment performance. 

IMO, the best measure of overall performance Quicken offers is the Average Annual Return.  You can get that on portfolio views for YTD, 1-year, 3-year, and 5-year periods.  You can also get the value for any time period through an Investment Performance Report.  That metric also known as in Internal Rate of Return takes into account additions, withdrawals, and income transactions, taken and reinvested, although it may not be obvious, and it considers the timing of those transactions.  If looked at on an account basis, the trading out of one investment to another will be neutral - no impact.  More specific info about AAR is in the Quicken Help files.   

Amount Invested is a dubious value.  If you look at it from a trading aspect, it considers that you have, for example, bought Apple 3 times for $35,000 total.  The fact that you sold of 2 of those lots for profits and now hold one lot that you paid $10,000 for is not a factor.  Over the selected time period, you put $35K into Apple and took out some other value.  $35K is your amount invested.  It is not the Amount Invested in your current holding; it is the total amount you have invested in the relevant period.  

Another nuance with Amount Invested is that the value is dependent on the starting date (Options, Portfolio Preferences).  If the starting date is, say, 1/1/2016, your Amount Invested will be the value of your holding as of that date.  It is modelling that on that date, you opted to keep that amount invested in that security.  Effectively, you chose to invest that amount by choosing not to sell the holding.  Rational and reasonable, but not necessarily what people expect.

HTH  " I understand that 'YTD AAR' is a bit of a misnomer, but I guess you would just call it 'YTD Return'"

No, that's wrong.  "YTD Return" is

(Current value of investment - Beginning of year value of investment) / Beginning of year value of investment

In January if the beginning value of an investment is $100 and a month later it's $101 then the "YTD Return" is 1%.  If that same investment at the end of the year is $101 then it's "YTD Return" is 1%.

On the other hand if the January beginning value of an investment is $100 and a month later the value is $101 then the "YTD AAR" you can figure is right around 12%.  That is you're projecting that a year out the investment will have a value of $112+ based on the first month's activity.

q_lurker

q.lurker said:

getting an accurate sense of my investment performance. 

IMO, the best measure of overall performance Quicken offers is the Average Annual Return.  You can get that on portfolio views for YTD, 1-year, 3-year, and 5-year periods.  You can also get the value for any time period through an Investment Performance Report.  That metric also known as in Internal Rate of Return takes into account additions, withdrawals, and income transactions, taken and reinvested, although it may not be obvious, and it considers the timing of those transactions.  If looked at on an account basis, the trading out of one investment to another will be neutral - no impact.  More specific info about AAR is in the Quicken Help files.   

Amount Invested is a dubious value.  If you look at it from a trading aspect, it considers that you have, for example, bought Apple 3 times for $35,000 total.  The fact that you sold of 2 of those lots for profits and now hold one lot that you paid $10,000 for is not a factor.  Over the selected time period, you put $35K into Apple and took out some other value.  $35K is your amount invested.  It is not the Amount Invested in your current holding; it is the total amount you have invested in the relevant period.  

Another nuance with Amount Invested is that the value is dependent on the starting date (Options, Portfolio Preferences).  If the starting date is, say, 1/1/2016, your Amount Invested will be the value of your holding as of that date.  It is modelling that on that date, you opted to keep that amount invested in that security.  Effectively, you chose to invest that amount by choosing not to sell the holding.  Rational and reasonable, but not necessarily what people expect.

HTH  

As an aside, I don't think there's a way to do YTD AAR, is there? I can see 1-/3-/5-year AARs,

I guess that works if you're constantly moving money in/out of your investments, but these are long-term accounts that I won't be drawing down for at least a decade or more. I'll give your words some thought, thanks.

Again my opinion, the value of the AAR calculation is that it works consistently for all (at least most) investment styles, approaches, or sequences.  There are situations that can throw it off  By and large, it gives a consistent and accurate presentation.  While you are not intending to draw money out very soon, clearly you are changing specific investments as time goes by.  I would think you would want measures of those specific investments as well as the entire package or portfolio.  I think AAR gives that data.  (End of sales pitch).

KnnNike

These comments have all been really helpful and insightful, thanks everyone.

One final question: for investments that I've held less than a year, when I add "Avg. Annual Return (%) YTD" to Investing > Portfolio, a "N/A" is returned for those accounts. However, if I go to Reports > Investing > Investing Performance, it gives me an IRR for those same accounts. Isn't this the supposed to be the same number? Why is it showing up in one place and not the other?

q_lurker

KnnNike said:

These comments have all been really helpful and insightful, thanks everyone.

One final question: for investments that I've held less than a year, when I add "Avg. Annual Return (%) YTD" to Investing > Portfolio, a "N/A" is returned for those accounts. However, if I go to Reports > Investing > Investing Performance, it gives me an IRR for those same accounts. Isn't this the supposed to be the same number? Why is it showing up in one place and not the other?

Why is it showing up in one place and not the other?

It is a quirk in the decision making for the program specifications.  For the Portfolio views, they decided that such situations were prone to what could be extreme unrealistic values, so they opted to always force the NA.  For the report they took the opposite approach and present the calculated value and included a fine print warning "Securities held for less than a year can yield inaccurate results."  (I would argue the mathematical calculation is accurate, but the result may be deceptive.)  If the report values exceed 10,000%, then they take the NA approach for the report.   

It can sometime be interesting to use the report to compare the Year-to-date computation to the Yearly computation.  The first basically takes the assumption that your investment has changed in value from 1/1 to today and will continue that path through the end of the year, extrapolating the short term to a full year.  The latter (Yearly) option assumes today's close is also the year end close - no further change in value.  

Say you went from $1,000 to $1,100 from 1/1 through 6/30.  YTD is going to calculate the 10% increase and say that is 20% AAR.  Yearly is going to see that as starting at $1,000 and ending at $1,100 for a 10% AAR.  

KnnNike

KnnNike said:

These comments have all been really helpful and insightful, thanks everyone.

One final question: for investments that I've held less than a year, when I add "Avg. Annual Return (%) YTD" to Investing > Portfolio, a "N/A" is returned for those accounts. However, if I go to Reports > Investing > Investing Performance, it gives me an IRR for those same accounts. Isn't this the supposed to be the same number? Why is it showing up in one place and not the other?

Yeah...that very last bit would only be true though if you also had $1000 from the previous 6/30 up until 1/1, right? But you're right, the numbers are different, another one of my accounts has a 1-year AAR of 20.02% while the YTD AAR is 22.26%.

For my purposes, I think I'll only use the YTD AAR for my newest accounts, and put more faith in the 1/3/5 year AAR for established accounts (not that past behavior is necessarily a predictor of future outcomes!)

Jim_Harman

KnnNike said:

These comments have all been really helpful and insightful, thanks everyone.

One final question: for investments that I've held less than a year, when I add "Avg. Annual Return (%) YTD" to Investing > Portfolio, a "N/A" is returned for those accounts. However, if I go to Reports > Investing > Investing Performance, it gives me an IRR for those same accounts. Isn't this the supposed to be the same number? Why is it showing up in one place and not the other?

No, if you take the "Yearly" choice in the Date Range for the Investment Performance report (near the top of the list, not the default "Year to date" or the "Last 12 months" choice) it sets the date range to 1/1 to 12/31 of the current year, and as q.lurker says it does the IRR calculation assuming there are no transactions or changes in security values between today and the end of the year.

KnnNike

KnnNike said:

These comments have all been really helpful and insightful, thanks everyone.

One final question: for investments that I've held less than a year, when I add "Avg. Annual Return (%) YTD" to Investing > Portfolio, a "N/A" is returned for those accounts. However, if I go to Reports > Investing > Investing Performance, it gives me an IRR for those same accounts. Isn't this the supposed to be the same number? Why is it showing up in one place and not the other?

Oh, I see...I was confusing "Yearly" with the "1-year AAR", which would be equivalent to choosing "Last 12 months" from the performance report, right?

That does give some weird numbers...that 22.26% YTD AAR now drops down to 9.28% for yearly.

It kind of begs the question...unless you're checking this on December 31st, why would you ever want to use the "yearly" option for the current year?

Jim_Harman

KnnNike said:

These comments have all been really helpful and insightful, thanks everyone.

One final question: for investments that I've held less than a year, when I add "Avg. Annual Return (%) YTD" to Investing > Portfolio, a "N/A" is returned for those accounts. However, if I go to Reports > Investing > Investing Performance, it gives me an IRR for those same accounts. Isn't this the supposed to be the same number? Why is it showing up in one place and not the other?

I think the option that makes the least sense for the Investment Performance report is the year to date, which produces very confusing results for securities whose prices change. Unfortunately this option is the default.

q_lurker

KnnNike said:

These comments have all been really helpful and insightful, thanks everyone.

One final question: for investments that I've held less than a year, when I add "Avg. Annual Return (%) YTD" to Investing > Portfolio, a "N/A" is returned for those accounts. However, if I go to Reports > Investing > Investing Performance, it gives me an IRR for those same accounts. Isn't this the supposed to be the same number? Why is it showing up in one place and not the other?

It kind of begs the question...unless you're checking this on December 31st, why would you ever want to use the "yearly" option for the current year?

The Yearly (1/1 to 12/31) effectively give you the non-annualized YTD return.  Whatever change from 1/1 to date, no further change for the rest of the year.  Some people like to see that sort of value.  

In contrast, if you got a 10% bump in January, does the YTD extrapolation of that throughout the rest of the year to a 300% YTD-AAR make sense?  No.  

YTD can make sense comparing like situations but the shorter the time basis, the less meaningful the data.  Likewise at times, the Yearly-AAR is more conservative and may be a better number for those not expecting everything to go up-up-up (or down-down-down).  

It pays to understand the choices you make.