Tracking a non-transparent investment account

[john8...@gmail.com]

First of all, thank you for this excellent project.

I have a retirement account to which my company and myself contribute with every paycheck. There is little control over investments in this account. One can choose a generic asset allocation from a pre-defined list, and contributions are automatically invested. There are no shares or prices, only a balance that fluctuates due to contributions and investment profit and loss.

Due to the lack of transparency in this account I'm not quite sure how to track it. A naive way might be to track the balance of the account using its base currency, adjusting the balance according to periodic statements:

2017-01-01 open Assets:Bank:Checking  USD
2017-01-01 open Assets:Bank:IRA       USD
2017-01-01 open Income:Bank:IRA:PnL   USD
2017-01-01 open Income:Company:Salary USD
2017-01-01 open Income:Company:IRA    USD

2017-01-01 * "Payroll"
  Assets:Bank:Checking               900.00 USD
  Income:Company:Salary             -900.00 USD
  Assets:Bank:IRA                    100.00 USD
  Income:Company:IRA                -100.00 USD

; Adjust IRA balance according to quarterly statement
2017-03-31 pad Assets:Bank:IRA Income:Bank:IRA:PnL
2017-04-01 balance Assets:Bank:IRA   110.00 USD

As far as I can tell this method would be sufficient for my current needs (tracking the account's balance, profit and loss). However, I wonder if there's a better way to track this sort of account?

[john8...@gmail.com]

After some further thinking about the example above, fluctuations in value are probably better defined as unrealized gains/losses rather than income. Perhaps an "Unrealized" subaccount is a better fit (like the plugin adds). Still, I wonder whether that is the right direction at all.

[Martin Blais]

On Fri, Sep 29, 2017 at 10:31 AM, <john8...@gmail.com> wrote:

First of all, thank you for this excellent project.

Thanks John.

I wouldn't do it this way, as this realizes the P/L.

I think the way I'd handle this situation is by using a fake commodity for shares.  In order to compute the price of this synthetic commodity, I'd just work back the price of this commodity by looking at your reported account balance against how much cash you put in it (the cost basis). At any point in time, Beancount allows you to compute the cost basis and the broker provides the current market value. The price of those "shares", at that time, is market value / cost basis, and you would input that in when you want data points. When you make a contribution, ideally you would compute the price at that point in time and divide the cash by that price, in order to adjust the number of shares.  It's a little bit backwards, but at least it would allow you to compute returns.

[john8...@gmail.com]

Hi Martin, thank you very much for your response.

Although I'm familiar with the individual terms & concepts (read the vast majority of the

project's documentation), I haven't been able to put the pieces of the method you described together.

Would you be able to provide a brief example of how it might work?

[Metin Akat]

Hi,

I think Martin means something like this (or at least I'd do something like this, though I haven't given it a lot of thought):

2017-09-01 * "Retirement account"

    Assets:Investments:Retirement     10 RETIREMENT @ 1 USD

    Income:Salary:Retirement            -10 USD

By this point you'll see that the balance is 11 Dollars so you input this directive:

2017-09-30 price RETIREMENT  1.1 USD

2017-10-01 * "Retirement account"

    Assets:Investments:Retirement      10 RETIREMENT @ 1 USD

    Income:Salary:Retirement             -10 RETIREMENT @ 1 USD

By this point you see that the balance is 21.50, so you input this:

2017-10-30 price RETIREMENT 1.075 USD

By this method, in reports you'll be able to see both "book value" (how much you have invested) and "market value" (how much it's worth at any point of time) of the account.

I hope this helps,

Metin

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[Metin Akat]

Sorry the transaction on 2017-10-01 should be:

2017-10-01 * "Retirement account"

    Assets:Investments:Retirement      10 RETIREMENT @ 1 USD

    Income:Salary:Retirement             -10 USD

[Martin Blais]

Here's one example in attachment.

It requires you to look at 

(a) the total account value, by logging in to your broker, and 

(b) to compute the total number of "shares" you've accounted to that account.

Then you can enter transactions with a current synthetic price for this new "fund".

See attachment for a working example.

There may be other ways to do this, I just came up with this.

[Martin Blais]

Note: You'll need to update your code, I just fixed a bug that prevented doing this.

[Martin Blais]

Here's (in attachment) another way, more similar to what Metin did, whereby the number of shares of FUND match the cost basis (they're always added at 1.00 USD).

The price adjusts for the market value.

I think it's more appropriate to use the cost basis over currency transactions.

Both ways can work I think.

To view this discussion on the web visit https://groups.google.com/d/msgid/beancount/CAEk80bm-95ZP9hSoXh%3DFAVGD-1f2zog8Aqyu8ggcE%3Dz3VEOTMw%40mail.gmail.com.

[john8...@gmail.com]

Your examples made it clear, thanks to the both of you!

For the sake of completeness, here is an example inspired by synthcurrency2.beancount, including an attempt to track fees: https://gist.github.com/anonymous/ff6d859bbf614cdbfeea970b2862f8c3 (unfortunately could not attach a file replying from the groups.google.com interface).

Shares are sold at market price to cover the fees, like the example in this thread:

2017-04-30 price FUND                            1.0575 USD

;; Sell 3.00 USD worth of FUND shares (at market price)
;; 2.836879432624113475177304965 * 1.0575 = 3.00
2017-04-30 * "Fees"
  Assets:Bank:IRA:FUND   -2.836879432624113475177304965 FUND {1.0575 USD}
  Expenses:Fees                                    3.00 USD

As mentioned in the thread, the account's booking method has to be set to "NONE".

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[Justus Pendleton]

On Thursday, October 5, 2017 at 3:22:08 AM UTC+7, john8...@gmail.com wrote:

;; Sell 3.00 USD worth of FUND shares (at market price)
;; 2.836879432624113475177304965 * 1.0575 = 3.00
2017-04-30 * "Fees"
  Assets:Bank:IRA:FUND   -2.836879432624113475177304965 FUND {1.0575 USD}
  Expenses:Fees                                    3.00 USD

Somewhat offtopic but...I believe that beancount lets you "do math". So you don't need to write out -2.83blahblahblah. You can just write:

3.0/1.0575 FUND {1.0575 USD}