Explain "Amount Invested" in Recent Performance Screen

jvprice6

I am looking at the Investing tab and I have selected 'Recent Performance' to show. 3rd data column over is "Amount Invested" . Hovering over the column heading the pop-up explanation is: "The amount you invested, including expenses, excluding reinvested income". This is confusing. In one case have a Cost Basis of $12.3K, a Market Value of $11.1K, for a Loss of $1.2K. The Amount Invested is shown as $20.6K What is this supposed to tell me? Is this simply a story that over a number of years I have put in $20.6.K in this stock, and have sold about $8K of it over the years?

Over on the far right of the report is another column that heads "Amount Invested 1-Year". This is even more confusing because the number in that column is way big. I certainly did not invest $18.9 in that stock in the past year. So what one year period is the report talking about?

Jim_Harman

I do not find "Amount invested" very useful as an investing measure; it is used mainly as a component of other investing calculations.

As you have seen, it is not the same as Cost Basis. It does not decrease if you make a partial sale. It does not increase with reinvested dividends. It gets reset if you move shares between accounts.

My recommendation would be to ignore it.

Jim_Harman

I do not find "Amount invested" very useful as an investing measure; it is used mainly as a component of other investing calculations.

As you have seen, it is not the same as Cost Basis. It does not decrease if you make a partial sale. It does not increase with reinvested dividends. It gets reset if you move shares between accounts.

My recommendation would be to ignore it.

jvprice6

I see what you mean. I will try to ignore it. And based on your feedback. I figured out the 'Amount Invested - 1 year' . It starts with the amount already invested at the beginning of the year. Then it adds all the new invested amounts through the year.

q_lurker

Is this simply a story that over a number of years I have put in $20.6.K in this stock, and have sold about $8K of it over the years?

That is pretty much the picture I see. Say you were effective buying a cyclic security low and selling high, trading in and out. Over time you increased the amount you had invested in that security with each purchase. Similarly, with each sell you increased your return. Amount Invested is that accumulation of buys.

It is deceptive to many users because they expect it to be the “Amount Invested” in the currently owned shares. Not the case.

You have some control in portfolio views by setting the start date for return calculations (Options / Portfolio Preferences). If you set that to beginning of the year, the Amount Invested becomes the 12/31 valuation plus subsequent buys. Essentially that is saying by not selling the shares on 12/31, you chose to invest that amount in that security on 1/1.

I agree it is not a helpful number and that frequently makes ROI presentations likewise not helpful.

nls

I have wasted much of a Saturday on this. I thought I found a useful metric in Return in the Portfolio View, but now I think it is not so useful. I believe Return is based on current market value plus dividends earned that were not reinvested minus Amount Invested. But for this to be helpful, Amount Invested should not include proceeds that you got back when you sold shares. Amount Invested excludes dividends reinvested, which is helpful, but it never decreases when you sell shares reflecting that you now have less cash invested in the asset.

To top this off, transfers from one account to another are treated as a sell to increase cash in the "from" account, then a transfer of that cash to the "to" account, then a purchase of the shares in the "to" account. Since Amount Invested is based on the cash that goes in when you purchase and does not net out the cash returned when you sell, the Amount Invested is effectively twice what it should be for any shares that you transfer from one account to another.

It does not seem like it would be too hard to change this behavior so that Amount Invested (and other stats starting with Return that depend on it) would be more useful. But perhaps Quicken believes it would break something else, and that is why it is what it is. Corrections to my understanding are welcome.

Rocket J Squirrel

@jvprice6 @nls sorry you had to find out about this the hard way.

Many of us old-time users have wanted Amount Invested to be more useful, or at least add a new quantity Net Amount Invested which would decrease when shares are sold. More accurate Return quantities could be derived from that.

Our pleas have fallen on deaf ears literally for decades. Here is a suggestion from 2018 which you can no longer see because it was "archived".

Add a “Net amount invested” column and calculate ROI using the net amount (updated title)

Quicken Community Administrator admin January 2018 edited August 2023
Issue: Amount invested and ROI calculation

In portfolio view, amount invested column, Quicken only considers the total amount invested and do not adjust for investment sold or withdrawn.

For example, if an investment of $40000 was made to a money market fund in Jan 2017, and withdrawals (Sold) of $10000 each was made in June and August, Quicken considers the amount invested still as $40000. ROI is then calculated based on $40000 which makes the result skewed.

It is suggested to add a “Net amount invested”(Total investment minus withdrawals) column and calculate ROI based on the net amount
invested which should give a more accurate result.

nls

@Rocket J Squirrel

Sorry I did not see your response until now. Thanks for your reply. I was thinking more about the problem; maybe it is not so easy to fix. What do you do when the net investment amount is zero (or negative). Suppose you invest $10,000, have a gain of $3000, then pull out your original $10,000, so you are only "playing with house money"? The net investment amount would be 0. How would you define return rates (divide by zero??) If you pulled out $11,000, you would have a net negative amount invested (-$1000). Dividing your returns by that to get a return rate would give a negative return rate. So what I thought might have an easy solution may not be so simple — maybe that is why Quicken has punted on fixing it.

Jim_Harman

Quicken's ROI, which uses Amount Invested as part of its calculation, is most meaningful if there have not been any sales or shares removed since the start of the analysis period. Note also that the calculation is not annualized.

Rocket J Squirrel

Suppose you invest $10,000, have a gain of $3000, then pull out your original $10,000, so you are only "playing with house money"? The net
investment amount would be 0.

You might think so, but Quicken disagrees. Amount Invested would remain at $10,000 until you sold the last share of the security.

EDIT: I see you used the word "net". Yes, net amount invested would reduce, leading to the issues you mentioned.