Best practice for adding a currency to a current single-currency system

[Oon-Ee Ng]

Hi all,

I've got more than a decade of records in a single currency. I've just started a bank account in a foreign country (with a different currency) for investment purposes, so now I suddenly have to look at using more than one commodity in a way I haven't before.

First, let me summarise what I already know to save time:-

1. Using @ (exchange rate) or @@ (exchange value) in my multi-currency transaction

2. Opening accounts with the 'right' currency is helpful but not required

3. operating_currency should be used for your 'main' currencies, but can be just kept to one currency if you prefer. Mostly for display (used by fava)

My questions:-

1. Do I need to change account structure? Currently I have stuff like:-

Assets:Cash:MyName

Assets:Banking:BankName:AccountName

Income:InterestIncome

Income:Salary

Is it better long term to have different account names for my other currencies? So for example:-

Assets:Banking:CUR1:BankName:AccountName

Assets:Banking:CUR2:BankName:AccountName

Income:CUR1:InterestIncome

Or is it better (especially for income/expenses accounts) to just declare them as multi-currency:-

2020-10-02 open Income:InterestIncome CUR1,CUR2

What's the pros/cons of the above?

2. How do I (or should I even) keep track of flunctuating exchange rates?

My secondary (and tertiary, as my final aim is USD investments but I need an intermediary currency due to how my local currency works) currency is primarily for investment. My income for now is all in my primary currency, but eventually there'll be dividend/capital gain (or loss, I'm not naive) to be booked in the secondary and tertiary currencies. Is it easy to keep track of nominal exchange rates in a way which makes sense for reporting purposes, or is it better practice to only report an investment in the currency it is denominated in?

3. Does fava support hiding/displaying currencies at will? My wife also uses our fava install and for day-to-day use the additional currency columns would just be a bother especially on smaller smartphone screens.

Thanks all!

[Martin Blais]

On Thu, Oct 1, 2020 at 10:49 PM Oon-Ee Ng <ngoone...@gmail.com> wrote:

Hi all,

I've got more than a decade of records in a single currency. I've just started a bank account in a foreign country (with a different currency) for investment purposes, so now I suddenly have to look at using more than one commodity in a way I haven't before.

First, let me summarise what I already know to save time:-

1. Using @ (exchange rate) or @@ (exchange value) in my multi-currency transaction

2. Opening accounts with the 'right' currency is helpful but not required

3. operating_currency should be used for your 'main' currencies, but can be just kept to one currency if you prefer. Mostly for display (used by fava)

My questions:-

1. Do I need to change account structure? Currently I have stuff like:-

Assets:Cash:MyName

Assets:Banking:BankName:AccountName

Income:InterestIncome

Income:Salary

Is it better long term to have different account names for my other currencies? So for example:-

Assets:Banking:CUR1:BankName:AccountName

Assets:Banking:CUR2:BankName:AccountName

Income:CUR1:InterestIncome

For the assets/liabilities accounts I use a two-letter country code instead of CURx in my account names.

It's more relevant the country it's in IMO, not so much the currency, but the latter tends to follow the former.

Or is it better (especially for income/expenses accounts) to just declare them as multi-currency:-

2020-10-02 open Income:InterestIncome CUR1,CUR2

Up to you. I use a country code in my Income accounts (so the source country is clear when it's time to do taxes) but not for my expenses accounts.

 

What's the pros/cons of the above?

Just organization niceness.

 

2. How do I (or should I even) keep track of flunctuating exchange rates?

My secondary (and tertiary, as my final aim is USD investments but I need an intermediary currency due to how my local currency works) currency is primarily for investment. My income for now is all in my primary currency, but eventually there'll be dividend/capital gain (or loss, I'm not naive) to be booked in the secondary and tertiary currencies. Is it easy to keep track of nominal exchange rates in a way which makes sense for reporting purposes, or is it better practice to only report an investment in the currency it is denominated in?

It depends where and how you'll be paying taxes. Figure out how the taxes you'll have to file and to which countries, go through the calculation, that should tell you what rates you need to keep. I don't think there's a rule.

3. Does fava support hiding/displaying currencies at will? My wife also uses our fava install and for day-to-day use the additional currency columns would just be a bother especially on smaller smartphone screens.

Thanks all!

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[Oon-Ee Ng]

Thanks Martin!

On Sat, Oct 3, 2020 at 11:17 AM Martin Blais <bl...@furius.ca> wrote:

On Thu, Oct 1, 2020 at 10:49 PM Oon-Ee Ng <ngoone...@gmail.com> wrote:

Or is it better (especially for income/expenses accounts) to just declare them as multi-currency:-

2020-10-02 open Income:InterestIncome CUR1,CUR2

Up to you. I use a country code in my Income accounts (so the source country is clear when it's time to do taxes) but not for my expenses accounts.

So to be clear, everything under income and expenses you don't use a country code (and you use multi-currency)?

I guess it does make sense that I don't really care about which currency it is in, just total numbers, for income/expense.

Just organization niceness.

 

2. How do I (or should I even) keep track of flunctuating exchange rates?

My secondary (and tertiary, as my final aim is USD investments but I need an intermediary currency due to how my local currency works) currency is primarily for investment. My income for now is all in my primary currency, but eventually there'll be dividend/capital gain (or loss, I'm not naive) to be booked in the secondary and tertiary currencies. Is it easy to keep track of nominal exchange rates in a way which makes sense for reporting purposes, or is it better practice to only report an investment in the currency it is denominated in?

It depends where and how you'll be paying taxes. Figure out how the taxes you'll have to file and to which countries, go through the calculation, that should tell you what rates you need to keep. I don't think there's a rule.

My country doesn't tax capital gains or dividends from overseas investments, and I believe the US already applies a withholding tax on dividends anyway. But yes that's something I do need to look into.

[Martin Blais]

On Sat, Oct 3, 2020 at 1:59 AM Oon-Ee Ng <ngoone...@gmail.com> wrote:

Thanks Martin!

On Sat, Oct 3, 2020 at 11:17 AM Martin Blais <bl...@furius.ca> wrote:

On Thu, Oct 1, 2020 at 10:49 PM Oon-Ee Ng <ngoone...@gmail.com> wrote:

Or is it better (especially for income/expenses accounts) to just declare them as multi-currency:-

2020-10-02 open Income:InterestIncome CUR1,CUR2

Up to you. I use a country code in my Income accounts (so the source country is clear when it's time to do taxes) but not for my expenses accounts.

So to be clear, everything under income and expenses you don't use a country code (and you use multi-currency)?

I do for Income, not Expenses.

 

I guess it does make sense that I don't really care about which currency it is in, just total numbers, for income/expense.

Just organization niceness.

 

2. How do I (or should I even) keep track of flunctuating exchange rates?

My secondary (and tertiary, as my final aim is USD investments but I need an intermediary currency due to how my local currency works) currency is primarily for investment. My income for now is all in my primary currency, but eventually there'll be dividend/capital gain (or loss, I'm not naive) to be booked in the secondary and tertiary currencies. Is it easy to keep track of nominal exchange rates in a way which makes sense for reporting purposes, or is it better practice to only report an investment in the currency it is denominated in?

It depends where and how you'll be paying taxes. Figure out how the taxes you'll have to file and to which countries, go through the calculation, that should tell you what rates you need to keep. I don't think there's a rule.

My country doesn't tax capital gains or dividends from overseas investments, and I believe the US already applies a withholding tax on dividends anyway. But yes that's something I do need to look into.

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