Track investments in marketable securities

Manager can help you track investments in marketable securities in the Investments tab. As used in Manager, investments do not include depreciable fixed assets, loans to outside entities, capital contributions by owners, or inventory held for sale or production. Investments include, but are not limited to:

  • Shares of stock issued by other companies
  • Marketable bonds
  • Mutual funds
  • Exchange-traded funds

Essentially, an investment is something that can be bought or sold that represents an asset held to generate current income or future capital appreciation outside normal business operations.

Currently, the tab functions as a simple register. Other capabilities are planned.

Enable the Investments tab

To record an investment, first enable the Investments tab. Below the navigation pane, click Customize, check the appropriate box, and click Update:

Create an investment

Before you can record any transaction involving an investment, you must create it. This establishes a subsidiary register for the investment. *In the Investments tab, click New Investment:

Complete the entry:

  • Code can be any alphanumeric identifier for the investment. (Stock trading symbols are excellent examples.)
  • Name is how you want to refer to the investment.
  • Market price is the current market price of the investment. This field will be updated frequently, especially when transactions are entered involving the investment.
  • Starting balance is used only when migrating to Manager from a prior accounting system. It includes two components. Qty is where you enter the number of shares or units owned on the day you begin using Manager. Total cost is your total invested amount on that date (adjusted, if necessary for prior reductions). In many jurisdictions, this would be considered your accounting or tax basis.

Moustapha uses Manager for personal financial management. On the day he begins using the program, he owns 100 shares of XYZ Corporation common stock. Moustapha bought the stock several years ago, before using Manager, at a price of 50.00 per share. Today’s market price is 75.00 per share. He creates the following investment:

Automatic accounts

When the first investment is created, a control account named Investments is automatically activated in the Assets group of your chart of accounts. This account cannot be deleted while any investments exist, but it can be moved to another group if desired. The balance of the Investments account represents the current book value of all investments held.

A second account is automatically created in the Profit and Loss Statement named Capital gains on investments. By default, this account is uncategorized. Normally, this account should be assigned to a revenue group. When investments are sold, capital gains or losses are realized and posted here.

Transact investments

Once an investment is created, typical Manager transactions can reference it.

Moustapha decides to capture some of the capital gains accrued by his investment in XYZ. So he sells 10 shares at the current market price of 75.00. In doing so, he incurs fees of 15.00, for net proceeds of 735.00. Moustapha enters the following receipt:

The Investments tab shows the market value of the remaining 90 shares of XYZ stock. Recall that these were purchased at the same 50.00 price as the shares sold, so the average cost has not changed. Unrealized gains are calculated based on the current market price:

The sale caused 250.00 of capital gains to be recognized. These were automatically posted to Capital gains on investments:

In the example above, transaction fees were entered as a negative amount on the receipt because they reduced the amount received. The amount was posted to an expense account because it did not affect the average cost of the remaining investment quantity.

In the case of a purchase, transaction fees would be entered as a positive amount because they add to the amount paid. In some jurisdictions, such fees can be included in the cost basis of the investment and would be posted to the Investments account along with the cost of the investment units. In other jurisdictions, such fees are not considered part of the cost basis of investments and would be posted to a suitable expense account. Check with a qualified local accountant or tax authority to verify which situation applies in your jurisdiction.

Realized capital gains are calculated from the difference between the average cost of the investment and the unit price reported for the sale. However, market value and unrealized gains are based on the market price specified for the investment in its definition. For accurate reporting of market values and unrealized gains, all market prices must be up to date. This does not occur automatically.

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