Investment is an Cash Equivalent

mwinston

I have an investment portfolio that uses a Cash Management Fund as a Cash Equivalent. So my cash account is generally zero and all my cash is held in this $1 per share fund. Is there a way to treat this fund as "cash" so my cash availability shows the value of this fund?

Generally I would just ignore this fund and just treat it all as cash, but the download transaction reconciliation is complaining each time that my holdings are off and I would like to stop it from complaining.

Thanks in advance.

Sorry my category is wrong, but it wont let me select anything other than this.

Rocket J Squirrel

What financial institution is it? Some are compatible with treating a cash fund as just plain cash. Others are not.

NotACPA

In my several accounts with Fidelity Investments (both IRA type accounts and Taxable accounts), I carry the cash as simply cash.

That ends the need (if cash is carried as a security) to buy and sell the "cash security" constantly.

And, Q doesn't complain, because I simply don't download the Money Market Fund that the cash is REALLY in.

Chris_QPW

This has come up many times, and I think the "best answer" is "go with the flow".
As in different financial institutions handle this differently which means that you want to go with what the financial institution is doing.

For instance with Fidelity even though you see such a fund on their website they don't send transactions to buy/sell from that fund.  So in this case just leaving the cash is the cash balance of the account is the easiest way to do it.  If you wanted to track it in the fund you would have to manually enter those transactions.

On the other hand Vanguard does send such transactions.  So the easiest is just to accept the transactions that move the money in and out of that fund.  If you wanted to track the cash as the cash balance you would have to delete these transactions as then come in.

Quicken has no way to say "use this fund as cash".

Rocket J Squirrel

Chris_QPW said:

Quicken has no way to say "use this fund as cash".

It sorta kinda does. When creating an investment account, Q asks for cash and money market balances. Combined, these become the cash balance.

Chris_QPW

@Rocket J Squirrel What I meant (and I think @mwinton meant) is that you can't say "When you see transactions for fund X, treat them as cash".

Rocket J Squirrel

That is true. But there's something going on under the surface when Quicken help says

mwinston

@Chris_QPW is exactly right. The challenge is that when I go to reconcile at the end of the month, the statement has a total cash value (real cash and this fund amount). I will give what @"Rocket J Squirrel" says a go and see how that works. Thanks for the help so far.

Chris_QPW

mwinston said:

@Chris_QPW is exactly right. The challenge is that when I go to reconcile at the end of the month, the statement has a total cash value (real cash and this fund amount). I will give what @Rocket J Squirrel says a go and see how that works. Thanks for the help so far.

I have never found this to be any kind of challenge.  Investment accounts don't allow you to reconcile to the online balance.  The cash balance is always manually entered.

So in the case where you have a cash balance you put in the amount from that fund.  In the case where it is transferred to the security you put in zero.

And note that this lines up to what is going to happen when you compare the security balances (which do compare to what the broker sent).  As in for that fund if they are sending transactions there will be information for it to compare to.  If they aren't sending transactions there won't be a security to compare to and as such no mismatch.

At least that is what happens in my Fidelity and Vanguard accounts.  If the broker fails to send transactions and has the security also sent or the other way around, well that will cause a mismatch, but that is plain wrong.  They can't have it both ways.

As of what @Rocket J Squirrel found in the help.  Sounds nice, but I have never seen it work that way.

mwinston

@Chris_QPW That is correct. The institution (BNY Mellon) does send/download the transactions for this fund as shares. So it is reconcilable...my mistake. I think my issue is that if I track them as shares, rather than cash, then my cash always shows zero. Maybe just a mental block, but seems wrong to me.

I did try what @Rocket J Squirrel suggested and I can't get any of that to work. When you enter in the Money Market dollar, it just combines the 2 into a single cash "opening cash balance" transaction. During download, Q never prompted for cash fund.

I think I will just have to deal with this. It would be nice if Q would have the ability to set a security as a cash type, rather than a holding for this purpose manually. Not sure if there is a backdoor option (like changing a posting date of a non-investment transaction) to help with this?

Thanks for the help Chris and Rocket...

Chris_QPW

mwinston said:

 I think my issue is that if I track them as shares, rather than cash, then my cash always shows zero. Maybe just a mental block, but seems wrong to me.

I did try what @Rocket J Squirrel suggested and I can't get any of that to work. When you enter in the Money Market dollar, it just combines the 2 into a single cash "opening cash balance" transaction. During download, Q never prompted for cash fund.

Yes, a mental block.  
It isn't uncommon at all for investment accounts to have zero balances.  For instance that is the norm for a 401K account.

On the setting up of the account, that is exactly what I remember the behavior to be when I tried it, no matter what the help says.