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Idea: Add a Total Return Report (Treat Dividends and Cap Gains as Growth, Not Cost Basis)

Rob328

Quicken’s current performance metrics (ROI, Return %, IRR) treat reinvested dividends and capital gains as added cost basis, which is correct for tax reporting but misleading when evaluating portfolio growth. This approach understates performance and makes it nearly impossible to benchmark against indexes like the S&P 500, which use total return methodology.

I propose adding a new report option — or a toggle in existing reports — that treats reinvested dividends as growth rather than basis. This would align Quicken with industry standards, provide a clearer picture of “how my money grew,” and give users an accurate way to compare their portfolios against benchmarks.

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Rob328

I know many of us have struggled with Quicken’s treatment of reinvested dividends and capital gains. This makes portfolio performance look weaker than it really is and creates confusion when comparing to benchmarks like the S&P 500.

If you’ve run into this issue too, please add your vote here and share your experience — the more voices we have, the more likely Quicken will prioritize a true total return report that reflects how our money has actually grown.

q_lurker

Perhaps a couple of clarifications are in order.

Most presentations of index performances do not include dividends reinvested and many do not include dividends paid. So one needs to be very clear in trying to make an apples-to-apples comparison.

There are two ways reinvested dividends get applied within Quicken - either with a single Reinv___ transaction or with two transactions, an income transaction like a Dividend and a Buy Shares transaction. The use of one over the other seems to be as much a choice of the financial institution as it is the user. The programming has never attempted to equate that second approach to a reinvestment.

The ROI calculation that Quicken uses does attempt to make the distinction you seek. The denominator for that calculation is an 'Amount Invested' parameter which does not conceptually include additions by reinvestment. That Amount Invested value is considered by many to be flawed in that it does not decrease as shares are sold. I would also point out that it is a context driven 'dynamic' value. That is, if you ask for ROI 'from the beginning' Amount Invested will be one value. If you ask for ROI for year-to-date, Amount Invested will be the value on 1/1/2025. Further issues develop if the security has spun-off other companies or if shares have been transferred from one account to another (within Quicken). These are reasons I place more value in Quicken's Average Annual Return values (an IRR calculation) than in ROI-related values.

NotACPA

Any income that you receive from an investment, that is reinvested, IS PROPERLY ADDED TO COST BASIS.

That reinvested income bought more shares, and those shares have a cost.

If you don't want you reinvesting to add to your costs … don't reinvest. It's that simple.

Jim_Harman

Quicken has several similarly-named performance measures, so we must be careful to use the exact names. Unless noted below, I will use the names of the columns in the Investing > Portfolio views

Avg. Annual Return (%) is to me the most useful measure. It uses an Internal Rate of Return (IRR) calculation. This is the same calculation that is used in the Investment Performance Report (IPR) and is equivalent to Excel's XIRR function. It takes into account the gains or losses in share prices and the timing and amounts of cash flows into and out of a security or group of securities over the selected date range. Dividends and other distributions, whether received in cash or reinvested, are also included in the returns. It also takes compounding into account.

I think you will find that if you compare the Investment Performance Report annual results for a low fee S&P 500 index fund or ETF with reinvested dividends and no other transactions to the published total return results for the S&P 500 index for the same period, you will find that they are virtually identical.

Note that despite what the on-screen text says, the S&P 500 index that Quicken uses (Ticker symbol INX) does NOT include reinvested dividends. To see the S&P 500 Total Return index, you can add the ticker INDEX:SPXT to your Security List with a Security Type of Market Index.

If you set the date range to less than one year, the annualized percentages shown assume that the performance will continue at the same rate for a full year. This is useful for fixed price securities like money market funds, but not so much for other securities.

However there is a way to see YTD return on the IPR or Portfolio views. If you set the IPR date range to Yearly and Current year, the report shows YTD gains or losses assuming that the security prices are flat and there are no further cash flows for the rest of the year. In the Portfolio views, this is the same as setting the "As of" date to 12/31 of the current year and looking at the "Avg. Annual Return (%) 1-Year" column. There may be some differences between the reported percentages and those shown elsewhere, depending on the timing of any purchases or sales you have made during the period and whether or not you have reinvested any dividends or other distributions.

The data in the Return (%) columns in the Portfolio views is downloaded from Quicken's quote provider and is not affected by the timing or amounts of any purchases or sales. It assumes that any distributions have been reinvested. The data is annualized for periods of more than one year. It only includes publicly traded securities with valid ticker symbols, excludes ETFs for some reason, and is often out of date. Quicken does not store the history for this data; if it is not out of date it is as of the last date quotes were updated.

The ROI (%) columns are based on Quicken's Amount Invested figure. The starting amount is the market value of the selected security(s) and it increases if money is added, but does not go down if there are sales. Thus it will be higher than you would expect if there are partial sales during the period.

The Gain/Loss (%) columns are apparently calculated as (Ending market value - Starting market value) / Ending market value. The Help appears to be incorrect on this; it says the calculation involves the cost basis.

Rob328

Thank you q_lurker and Jim_Harman, I appreciate the detailed commentary. I did confirm one major part of my understanding of Quicken's IRR calculation was incorrect. See below.

NotACPA - thanks but I understand how reinvesting works. The issue is that I'm questioning if Quicken's specific calculations are flawed.

I've never been satisfied with Quicken's treatment of investment performance as they typically don't align with metrics from other sources. I recently asked Chat GPT how Quicken's metrics are calculated. Here's the part of GPT's answer that inspired me to check with the Quicken community:

I asked about a hypothetical $100 investment in a security that paid a $10 dividend in year 1 and ended at the same price I paid at the beginning of the year. Chat GPT's response:

📊 What happens with your $100 fund + $10 dividend

• Economic reality: You started with $100. After the dividend, you have $110 worth of value (whether reinvested or taken in cash). That’s a +10% gain.

• Quicken IRR method: Quicken records the $10 dividend reinvestment as a new purchase. Starting basis: $100. Reinvested dividend: +$10 basis. Ending value: $110. Return vs basis: (110-110)/110 = 0%

This is why Quicken’s IRR can look misleading in simple reinvestment cases — it treats the dividend as if you “added” money, even though you didn’t.

This was part of a larger chat in which GPT led me to believe Quicken's IRR formula was flawed.

Knowing that today's LLMs are sometimes just plain wrong, and after reading some of the commentary here, I did a test in Quicken. I created a fake security, bought $100 at $1/share on 1/1/21, and then calculated and entered a 10% dividend on 12/31 each year (12/12 for 2025), never changing the share price from $1. I tried this with reinvesting as well as taking the dividend in cash.

If Chat GPT was correct, the result should be an Avg Annual Return of 0%. In fact, in both cases Quicken calculated an Avg Annual Return of (approximately) 10% in the Investment Performance Report.

On the other hand, the "Avg Annual Return (%) 1-yr" and "Avg Annual Return (%) 3-yr" columns I have set up in the Investing>Portfolio tab show approximately 22% and 14% respectively. This changes to ~10% when I set the "As of" date to 12/31/2025, per Jim_Harman's comments. Presumably this is due to the 12/31 dividend entries in prior years being picked up in those columns along with the 12/12/2025 dividend. Goes to show how a minor difference in timing can cause outsized variation in performance metrics.

NotACPA

I'd vote against this idea, if that were possible.

It is, simply, bad accounting, and there are other reports which approximate what's being asked while still being proper accounting.

q_lurker

You should be able to replicate the 1-year and 3-year columns with the Investment Performance report by setting the dates accordingly and having the detail shown. I suspect you are seeing two $10 dividends in the 1-Year as-of-today value leading the the approximate 20+% return value. Similarly, you are seeing four $10 dividends in a three year period leading to the ~14% return. That is, nothing (I see) incorrect about those values. If you had dividends paid on 12/12 each year, I suspect you would be at the 10% per year returns on those 2 columns.

Rob328

That was my assessment too, and I think you described it exactly right. I didn't mean to suggest it was incorrect. Just thought it was interesting how big an impact the timing made. It makes sense in that the 1-yr return is picking up 2 yrs of dividend payments (12/31/2024 and 12/12/2025).