Entering investment dividends (Q Mac)

TJennings

Simple question. I just need the answer, please. Please don't 'splain what I should and shouldn't know. I'm an experienced bookkeeper. The investing stuff (specifically capital gains) was not my strong suit in my accounting classes way back when (classes I otherwise aced).
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I get a monthly statement from my brokerage. I need to enter transactions manually, since I can't get it to download. That's fine. No biggie. I don't have THAT many investments.

When I get dividend income, it's paid into a cash/money market/sweep account. In Quicken, the MM account is created under the Savings category, separate from the Investing category. Makes sense. But, the investment subcategories are not available in the Savings category. So, I can't choose Type >> Income: Dividend AND choose the MM account for Transfer: MM.

QUESTION: So, how do I book this transaction? Do I book the tx going into the brokerage account so I can do Type >>Income: Dividend, then do a separate entry moving it out to the MM account? Is there a better way?

jacobs

If you keep the money market account as a savings account, you need to record the Dividend in the investment account, and then do an additional transaction with the type Payment/Deposit to transfer the cash from the investment account to the savings account. 

Alternatively, as was explained above, you could choose to not have a separate savings account, and instead represent the cash in your investment account by having a security for the money market funds. In that case, you'd enter the dividend transaction, and then enter a Buy transaction for the money market security.

Hope that's brief enough for you.

Boatnmaniac

Hi @TJennings .  I am assuming that by "MM" (money market) you are referring to a "MMF" (money market fund).  A MMF is an actual security that many investment companies use in investment accounts to hold cash.  The security price is always $1.00 per share.  A money market account is more like a high interest bearing bank account and it is not a security.  Am I correct in my assumption that you are referring to a MMF instead of a MM?

You certainly can try to manage the cash in your investment account the way you are suggesting but to me it seems cumbersome and it will then not give you an accurate picture of the total value of your investment account because of the cash will be held in a separate account.

Since you are managing your investment account manually there are two approaches to managing cash that are commonly used and which you might want to consider:

1. The approach that I and many other SUs use is to simply hold the cash in the investment account as cash.  We always know that the investment company actually holds cash in a MMF but since it is always $1/share we know it is the equivalent to "Cash".  By doing it this way we can always see the cash value of the account in the account's Cash bucket instead of having to search for it in the Holdings view.  And we do not need to try to "fool" the system by doing a transfer to another account or doing a separate securities (the MMF) buy transaction.
   
2. The other approach is to enter the Dividend transaction and have the cash go into the account's cash balance.  Then do a Buy transaction to purchase an equivalent value (in $1 shares) of the MMF security and use the cash in the account for that purchase.  People who do it this way often do it because they want the Holdings in Quicken to exactly match what is shown in the statements.  But, to find the cash value in the account in Quicken you will need to take the extra step of looking at the Holdings in Quicken for that MMF.

Doing #1 or doing #2 is a matter of personal preference.  A little less effort is needed for #1 while #2 provides a more accurate representation of Holdings (but no difference in terms of total account value).

Now, if your investment company really holds the cash in a sweep account then the only realistic option that I can see for how to manage it is to hold the cash in the account as Cash.  A sweep account is really nothing more than an interest bearing savings account so in my mind holding it as "Cash" would be very appropriate.

Let me know if this answers your question or if you have any other questions.

TJennings

I really just needed to know how to enter the transaction. Not all the other stuff, which I was hoping to avoid. Basically, show me the t-account set-up. Really. I know what the different accounts are and the $1.00 value. Thank you. So, #2 is what I suggested.

Boatnmaniac

TJennings said:

I really just needed to know how to enter the transaction. Not all the other stuff, which I was hoping to avoid. Basically, show me the t-account set-up. Really. I know what the different accounts are and the $1.00 value. Thank you. So, #2 is what I suggested.

#2 is to enter a Dividend transaction in the investment account with the cash from it going into the investment account cash balance and then to do a Buy transaction for the MMF using the cash balance of the account to purchase it.  The Dividend transaction, the MMF Buy transaction and the resulting MMF shares purchased in that transaction remain in the investment account.  There is no separate Savings account for this so there are no transfers of any kind...just a Dividend transaction and a Buy transaction.

Or are you asking how to manually enter investment account transactions? 

TJennings

Never mind. You’re killin’ me. Peace out.

jacobs

If you keep the money market account as a savings account, you need to record the Dividend in the investment account, and then do an additional transaction with the type Payment/Deposit to transfer the cash from the investment account to the savings account. 

Alternatively, as was explained above, you could choose to not have a separate savings account, and instead represent the cash in your investment account by having a security for the money market funds. In that case, you'd enter the dividend transaction, and then enter a Buy transaction for the money market security.

Hope that's brief enough for you.

TJennings

> @jacobs said:
> If you keep the money market account as a savings account, you need to record the Dividend in the investment account, and then do an additional transaction with the type Payment/Deposit to transfer the cash from the investment account to the savings account. 
>
> Alternatively, as was explained above, you could choose to not have a separate savings account, and instead represent the cash in your investment account by having a security for the money market funds. In that case, you'd enter the dividend transaction, and then enter a Buy transaction for the money market security.
>
> Hope that's brief enough for you.

That was nicely brief and free of extraneous explanations. Very helpful, and marked as such. I need to be able to balance the cash activity from the statement, so your first solution seems best. Thank you! Have a wonderful day!