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Investing-Performance tab

Gary R

12/31/2021--Selected accounts $10,000, Account Value--$50,524
8/13/2022---Selected accounts $3,660, Account value --$437,585
This is just one account--what does this mean?

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Jim_Harman

I think it means Quicken's calculation is flawed, because it exaggerates the gain or loss if there are large transfers into or out of the account during the period. Apparently the account you selected started the year with $50,000 and currently has $437,000.

Please review the details of this discussion, which you have already commented on.
https://community.quicken.com/discussion/7905946/improve-growth-of-10-000-calculation-so-it-does-not-overstate-returns-with-purchases-or-sales

Gary R

I had posted in the wrong forum last time and wanted to revisit this again. I didn't have any purchases in my accounts until around March of 2022. Your example with the S&P was 12/31 and then 1/3/--
I did a screenshot of just one account to see if anyone could explain what the numbers meant.

Jim_Harman

In your example posted above, Quicken is saying that the account started the year with $50,524 and now it has $437,585. The ending value includes changes in the value of securities in the account and also money that has been transferred in and out. The Selected Accounts numbers indicate that if your account started with $10,000 and compensating for transfers, it would be worth $3,660 now.

Normalizing your account to $10,000 facilitates comparisons to indexes and other investments.

Quicken's "Growth of $10,000" calculation is not documented anywhere, but it appears that it compares the gain or loss to the starting value of the account. If money has been added to the account and invested, changes in the value of the investments are overstated.

Gary R

Let me ask this question a different way----Quicken is not able to provide me the performance numbers I'm looking for. How would you do this manually when you have many buys and sells during the period.
I'm just trying to come up with a reasonable YTD % return on my investments, but not sure how to do it manually.

Jim_Harman

I would use the Investment Performance Report. Choose the account or accounts you want and set the Date range to Yearly and Current Year.

This does an annualized IRR calculation, The underlying assumption from choosing the yearly date range is that you will hold the same securities as today for the rest of the year and their share prices will not change for the rest of the year.

We seem to be repeating ourselves here. Back on Aug. 2 you said, quoting my post in an earlier discussion about the Investing > Performance page,

"
"Bottom line is that for me at least, the most useful and reliable performance indicators in Quicken are the Investment Performance Report and the Avg. Annual Return (%) columns in the Portfolio views, which present the same data as the IPR."

I think I will just use your recommendation and forget about the Performance tab on the register.
Appreciate your feedback, Jim
"

Gary R

I must have had a senior moment and forgot about the Aug. 2 post.
I did run into an issue with the performance report for one of my accounts. The Performance report showed a difference of $1300 vs. the Portfolio Register for Return Year to Date.
I see what the difference is but don't know how to correct it.
It had to do with shares distributed in the AT&T Warner transaction. Quicken added these shares with a zero cost basis. The Performance Report shows $1300 for Warner on that date in the first column.
I also compared the Performance to the brokerage account and Quicken portfolio Register Year to date returns agrees with the brokerage. I don't how else to record the Warner transaction.

mshiggins

The discussion on the ATT WBD spinoff is here:

https://community.quicken.com/discussion/7911768/accounting-for-att-wbd-spin-off

Gary R

That helps a lot--Thanks

Gary R

I just checked my Brokerage accounts and there are no entries for AT&T for the spinoff. The only entry is the Warner shares in Late March. Should there be some transaction for T???
Really confused now

Gary R

I called Fidelity and was told that AT&T shares not affected, but Warner should show a zero basis. When I ADD shares with a zero basis and then go to the performance report, the performance report shows the shares at the price dated 4/15/22 and adds that to the cost basis. It should be zero since no payment was made.

Jim_Harman

Gary R said:

I called Fidelity and was told that AT&T shares not affected, but Warner should show a zero basis. When I ADD shares with a zero basis and then go to the performance report, the performance report shows the shares at the price dated 4/15/22 and adds that to the cost basis. It should be zero since no payment was made.

If you study the discussion linked by @mshiggins above, you will find that leaving your T shares unchanged and adding the WBD with a zero cost basis will produce the correct number of shares of each but the wrong cost basis. In a taxable account, the cost basis is important because it controls how much you pay in capital gains when you sell the securities.

In a spin-off like this one, the cost basis of your T goes down and the same amount becomes the basis for the WBD you receive. That is what Quicken's Corporate Spin-off action does.

When tracking performance over a period that includes the spin-off, you should include both securities.

At the risk of opening a can of worms, let me point out that there are three amounts that come into play here:
-- What you paid when you acquired the shares - This affects the cash balance in your account

-- The market value when you acquired them - This affects Quicken's performance calculations

-- Your cost basis - This affects capital gains calculations

In an ordinary Buy transaction, all of these are the same.

In the case of the WBD shares you acquired through the spin-off, you paid nothing, the market value was (number of shares) x (share price on the spin-off date), and the cost basis depends on the spin-off ratio and what you paid for the AT&T shares.

Quicken's Added transaction is for shares that you paid nothing for. The Number of shares and Price paid entries set the market value. The Price paid should be the actual share price on the spin-off date, not zero. The Total Cost and Date acquired set the cost basis.

q_lurker

Fidelity’s statement as you reflected is only defensible if this is a tax deferred account where cost basis of individual holdings is not relevant to taxation. In truth, their statement is always wrong.

For that spin-off and nearly all others, some portion of the parent company basis transfers to the spin-off company.

In Quicken, the Add Shares is (now) treated as an additional investment for computing average annual return. In your other recently started thread on this, I’ve identified the only approach I am currently aware of to balance that added investment term.

(PS - you could make the closing price of the spin-off to be $0 on that date to make the added investment $0, but that is too irrational for me to take seriously. I can’t imagine what other unintended consequences that might have.)