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Level 1

How do I input transactions for buying stocks or investing in mutual funds - expense or transfer?

Currently I have Mutual Funds and Stocks setup as Current Assets>Investments. When I purchase a fund with my bank account, should I use expense or transfer? How does it affect the profit & loss, balance sheet and cash flow reports doing it one way or the other?

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Best answer 09-27-2019

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Level 15

How do I input transactions for buying stocks or investing in mutual funds - expense or transfer?

The truth is QB is totally unsuited for investing

use quicken, I have no experience with mint in this area so I am not sure it will work

If this is  a company investment account, keep the total asset cost in QB, but track purchase, splits, dividends, return of capital, reverse splits, spin offs, mergers, etc etc in quicken and just make total entries in QB

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4 Comments
Level 15

How do I input transactions for buying stocks or investing in mutual funds - expense or transfer?

The truth is QB is totally unsuited for investing

use quicken, I have no experience with mint in this area so I am not sure it will work

If this is  a company investment account, keep the total asset cost in QB, but track purchase, splits, dividends, return of capital, reverse splits, spin offs, mergers, etc etc in quicken and just make total entries in QB

View solution in original post

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Community Champion

How do I input transactions for buying stocks or investing in mutual funds - expense or transfer?

Stocks and mutual fund investments are assets. If your business buys and sells then you have purchased an asset to hold. Purchase price plus any fees. Never adjust value (basis) due to market fluctuations. QB is not designed to be a market tracker.

When you sell your receipt minus fees, minus book value of stock is your capital gain. Depends on your country laws, but here 1 year or less held is short term gain taxable at an individual's marginal tax rate. Longer than 1 year is long term capital gain with a different flat rate of taxation on the gain.

An example: al in US dollars: I buy 100 shares of Tata Motors (TTM on NYSE) at $22.15 through eTrade but I am a slow investor, less than 30 transactions per quarter, $6.95 per transaction (4,95 if over 30) My cost for these shares is 2215+6.95= $2221.95

Say it goes up to $25 and i sell, I get $2500-$6.95 or $2493.05 less my basis of $2221.95 results in a gain of $271.10 Say it dropped to $20 and I got nervous and sold, I receive $2000 - - $6.95 or $1993.05 a capital loss of $222.90. Neither transaction really results in income or expense but in gain or loss. Length held determines short or long. Tax treatment will determine where to claim and if the loss can even be used to offset other income.

Now, after all that, if this is the business money being invested and the stocks are owned by the business go ahead and run it through your company books. If it is personal investing it has no place in QuickBooks. QuickBooks is not personal finance software

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Community Champion

How do I input transactions for buying stocks or investing in mutual funds - expense or transfer?

As far as the actual transaction you do in QB it is better to use Expense even though it is not an expense - this way you can identify the brokerage house as the vendor or even the fund name, but the posting is the purchase of an asset so it is not going to affect P&L
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Level 15

How do I input transactions for buying stocks or investing in mutual funds - expense or transfer?

I use Quicken exactly for this reason. It has the tools built it, for lot purchases and sales, investment earnings as dividends or return of equity or reinvestment, stock splits, conversions, FMV updates, etc.

If you intend to do this with any QB tool, you will need to be doing manual entries and only for Realized gain/loss, as well. I do advise you to use a noninventory item for this, so you can include quantity.

I really do not know much about the India stock exchange.