Manually adding investment account & creating transactions
I added a 401k to my Quicken and manually added all transactions using the 'Bought' option in the 'Action' column. This included inputting accurate purchase dates, share quantity, share price, and total cost. Once the account was properly reconciled, I added a 'Deposit' transaction for the total cost of all the shares I had purchased over time. I dated this deposit a day prior to the first share purchase transaction. This transaction is an 'XIn' and is a self-transfer into the 401k account. This removed the negative cash balance in the account you accrue when purchasing stock like this in an account without a cash balance.
The problem I am having is the investment report metrics, such as in Investment Performance, do not seem to be correct. The share purchases go back a few years so I thought I would be OK.
I wanted to ask if I handled the retroactive process correctly, or if I need to change the process in which I added the shares to the account. The first error I am noticing is in the arithmetic it is reporting. For instance, when I check the numbers in the report between 'Returns' and 'Investments", the %'s are not correct. As in, when i manually do the calculation between the two, I have a different [and accurate] number to Quicken.
Thank you in advance.
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I might have used Add Shares transactions rather than Buys thereby avoiding the cash deposit but both approach’s should have worked properly.
What performance metric issue did you have specifically? Do you have sufficient price history data for the investment performance report as you are using it? Yearly returns would require year end prices, for example.
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I thought about using the 'Add Shares' option, but from what I recall, this does not ask for a share price, but just the name of the stock and the quantity of shares. This results in a zero 'Investment' (as you mentioned, avoids the cash deposit) metric in the account from what I recall. You need a cost basis.
To answer your question, the first error I am noticing is in the arithmetic it is reporting. For instance, when I check the numbers in the report between 'Returns' and 'Investments", the %'s are incorrect. As in, when I manually calculate between the two, I have a different [and accurate] number to Quicken.
Thanks for the quick reply. I am going to go through everything again and assure Quicken's historic stock pricing is accurate. I know it isn't unheard of for there to be a random day or two where quicken has the stock price as zero. I just wanted to hear from someone else this process should have worked before I put more time into digging.
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re: arithmetic issue. The report shows Average Annual Returns. So in a simple sense if you returns over investments showed a doubling over a 5-year period, that might be a 15% average annual return.
The other point I missed in my initial reply would be dividends and similar income. If some of those buys were reinvested dividends, omitting the income aspect could affect the return value.
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One issue I see with your approach is that your entries do not match what happened in real life. Your account starts as all cash and the cash is gradually consumed buying shares. But what actually happens in a 401(k) is that the cash contributions are ongoing, with the cash from each pay period used to buy that period's shares.
This will definitely affect the performance shown by the Investment Performance Report (IPR) when it is subtotaled by account, because the initial cash will have a return of zero %.
I think @q_lurker s approach of using Adds would give a more accurate result. And when adding shares, Quicken does give you the opportunity to provide the purchase date and cost.
Re: the percentages in the IPR, they will not be a simple (Returns/Investments) -1. They are the result of an IRR calculation, which takes the timing of investments and returns into account and includes compounding. This will be most apparent if you look at multi-year returns.
Also there is currently an issue with the IPR which causes it to produce different overall totals depending on how it is subtotaled. See this discussion
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The IRR report looks at 3 items: Opening balance (presumably $0), the date and amount of cash coming into or out of the Account, and the ending balance.
It doesn't look like Added actions will work for correct metrics:
The Added action used a Date Acquired of 1/5/2024 and $2 per share, with the 1/5/2025 per share price of $10, but since the IRR report doesn't "see" any cash crossing the frontier into the Brokerage Account on 1/5/2025, it gives erroneous results.
Given that you've entered all the transactions as Buys then the straightforward way of correcting this is to create a dummy, offline Bank Account, delete that opening deposit of cash, and on the same date as each Buy deposit cash from the dummy Bank Account into the Brokerage Account.
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@Tom Young I think you are confusing the calculations by doing everything on the same day. I set up a test where I started with an empty account and Added 10 shares of a S&P index fund on 1/1/24, then ran the IPR for 2024. Here is the result, which looks correct to me.
The S&P index was up 23.3 % for 2024.
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re Add Shares As @Tom Young has demonstrated, the IPR uses shares x closing price for the investment value of the Add Shares transactions. For different situations, that may or may not be most appropriate. I think for this discussion, I see it as being OK since the Add Shares cost basis would presumably be the same as the closing value on that date.
Likewise the point @Jim_Harman makes about cash flow varying over time versus the all-at-once entry @nerd86 made is applicable.
A key aspect to @nerd86 's concern about the report is how they want that info - by account, by security, by year or other time frame, all of the prior? Certainly to really get it all right means properly duplicating reality - right cash flow in, right dividends out or reinvested, any redistributions made (sells and buys). But all that detail may be more than the OP chooses to duplicate.
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I was pointing out that sitting down on day "X" and Adding years worth of transactions with correct Dates Acquired, a logical approach, particularly if you believed the Dates Acquired would be used in the metrics, just wouldn't work.
For whatever reason I assumed that this was what the OP did. My mistake.
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