Tracking and Annity in Microsoft Money

[Mark Fields]

I use Microsoft Money Plus Deluxe, sunset Edition

Would anyone have a suggetion on how to track an annuity?

I found this old Archived article:

https://ftp.zx.net.nz/pub/archive/ftp.microsoft.com/MISC/KB/en-us/150/176.HTM

The annuity is after tax money thet we used from the sale of a home which did not occur until after we bought our current home.  We wanted to have the amount safe and earning modest interest, just no losses while we paid down mortgage on the new home.

The original sum of money into the tax-deffered annuity was split to two investments, one which was indexed to the S&P 500 and the other into a fixed annuity that pays 4% interest.

How would I track this in Microsoft Money? 

Thoughts

1) Open an Asset Account

2) make a split from the associated cash account and purchase the two investments

3) But as the assets grow, how to I account for the growth money only, as interest, or ???

I'm thinking I should keep the original sum separate can see the amount that has a tax liability.

Mark Fields

[joe dempsey]

Setup an Investment account and purchase a fund and a bond

The indexed amount would have a price, and this could be updated to reflect the increase or decrease in the value. Does the fund(?) pay out dividends?

The fixed interest would just have interest payments to whatever account the interest is paid into

[joe dempsey]

On second thoughts, the annuity is not a bond. In fact it now has zero value as you have replaced the money with a guaranteed stream of interest payments.

Not sure how you would account for this - I do not have any annuities nor tried to model them, sorry

[Ameridan (microsoftmoneyoffline.wordpress.com)]

The way I setup an inherited annuity that had 37 payments remaining:

I setup an Investment account, renamed the Cash account xxx annuity (remaining value), and setup 37 recurring bills to account for all of the 1099 activity: 

[Mark Fields]

A couple things on this.

First of all I spelled Annuity wrong, which I corrected for this post. Sorry about that.

Secondly, I did not mention this but the amount invested went into two "funds".  They don't have standard fund ticker symbol and can't be tracked in the same way, e.g. VTSAX - Vanguard Total Stock Market Index Fund Admiral Shares.   One is an index Fund that is indexed to the S&P 500 so I created a name INDEX S&P 500 with no Symbol and the other is a Fixed Rate Fund which is guaranteed a 2.5% return which I called Fixed 2 point 5.  They were bought because we had not sold our previous house before we bought our current one with a new mortgage and we wanted to have the money ready to pay off the new mortgage within 7 years based on when I migh retire. The annuity is in an earning phase and we have not taken any distributions.

What I did was transferred the cash into an associated cash account, then used that cash to purchase "shares" worth $1 each in each "fund".  The S&P index based fund pays a reinvestment annually.  Even if the S&P completely tanks, the money will never go negative, the interest paid is zero.  But, there is a maximum it will pay in good years.  For example if is goes up 20% the max kicks in and that's all we get. 

I was trying to see how Money could graphy the S&P over time to compare but I have not figured thay out.  I do use MDMoneyQuotes and grab the close of the S&P 500 periodically but I have not figured how to gget it to graph in MS Money sunset, but that's another story.  

So for the fixed fund I look at the value at month's end and calculate the increase $ and show this as interest posted the the cash account, then I buy more shares at $1 per share based on that interest.  It worked, and the annual return came out exactly 2.5%.  For the index fund I can make the transaction only once per year and the S&P easily went over the max that is paid so I was limited to the max. 

But Money shows the annual return for the combined amounts, and the good news was that the decision my wife and I made in 2017 was pretty good, the interest rate on the money earned in the Mutual Fund was higher than our original mortgage rate on the house.  Also, we refinanced last year without touching the money in the annuity, and that mortgage is even lower than the original mortgage, and the closing costs were easily repaid within a few months.

I know when it comes to withdrawing from the annuity I will have to "sell" into the associated cash and likely pay income tax on the earnings but thats a different process.

Mark