Portfolio > Average cost column showing wrong value

[Leonardo H. M]

Hi Everyone,

my investment (FUNPRESP) has the average cost of 2,83.

But it's not possible! The last price of this mutual fund was 2,53 and the historical price has never being above 2,55. So, it's impossible to have an average cost of 2,83. Take a look at the price history chart below. The chart shows all buying orders. None was above 2,55.

Does anybody know why money is calculating my average cost high above what it should be expected?

Thank you.

[joe dempsey]

What transactions does this investment have?

[joe dempsey]

And what is the cost basis - average cost (single category) or average cost basis (double category)?

[joe dempsey]

What is the value of the purchases and did you dispose or sell of any of them?

[thoma...@gmail.com]

Leonardo,

Average cost is not based on Price History, but on PURCHASES

Click on the “+” sign and check all you Buy/Purchase transactions

 

From: microso...@googlegroups.com <microso...@googlegroups.com> On Behalf Of joe dempsey
Sent: Monday, September 19, 2022 6:34 AM
To: Microsoft Money <microso...@googlegroups.com>
Subject: Re: Portfolio > Average cost column showing wrong value

 

What is the value of the purchases and did you dispose or sell of any of them?

On Monday, September 19, 2022 at 10:26:37 AM UTC+1 joe dempsey wrote:

And what is the cost basis - average cost (single category) or average cost basis (double category)?

On Monday, September 19, 2022 at 10:21:32 AM UTC+1 joe dempsey wrote:

What transactions does this investment have?

On Sunday, September 18, 2022 at 9:47:57 PM UTC+1 leonard...@gmail.com wrote:

Hi Everyone,

 

my investment (FUNPRESP) has the average cost of 2,83.

 

 

But it's not possible! The last price of this mutual fund was 2,53 and the historical price has never being above 2,55. So, it's impossible to have an average cost of 2,83. Take a look at the price history chart below. The chart shows all buying orders. None was above 2,55.

 

 

Does anybody know why money is calculating my average cost high above what it should be expected?

 

Thank you.

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[joe dempsey]

Out of interest, what version of Money are you using?

I don't get the B, S or D icons on my price History graphs - I think they were removed at some time in the past?

[Leonardo H. M]

Hi Joe,

I have only "Buy" transactions

The investment was configured as Average Cost Basis (Double Category). Than, just before sending the first email to this group, I changed it to Actual Cost Basis. Than, I checked the portfolio again and nothing changed. Maybe this change would take effect only for future transactions? I really don't know.

The purchase values started at 1,67 and the last one was 2,53. The peak value was 2,55.

Microsoft Money Plus Deluxe 17.0.120.3817

See these images with all transactions prices

[Leonardo H. M]

Hi Thomas,

please, check my last post to joe.de...

I have attached all my purchases.

They were all buy transactions.

They started at 1,67 and the peak price was 2,55.

If peak price for this investment is 2,55, how could it be averaged to 2,83?

I still didn't get it.

Thank you!

[joe dempsey]

I will have a go t reproducing the error later today - I don't have the quanities you purchased but wil try with different ones. I don't think posting the quantites and values you purchased would be too damaging to your privacy, but ...

Have you tried looking at the Portfolio screen and entering dates starting from 02/08/2017 to isolate when the error starts

You could also export all the transactions to Excel and calculate the total and average costs by date and compare that to those in Money

Why do you have multiple purchases on the same day - that might be overloading the tables in Money used to keep track of the lots purchased

[joe dempsey]

Sorry, I am not able to replicate the error - imported a whole series of Buys and the average and total cost is correct

I suggest that you use excel to calculate the total cost for each period from 2/8/2017 to 28/2022 and compare that to the total cost reported in Money to identify when the error occurs

[Leonardo H. M]

I sent you privately  the excel export.

Look the following print. I have isolated the investments until my first buy and even this first buy results in a incorrect average cost.

[joe dempsey]

Is there a currency exchange issue by any chance - the currency of the accoutn is R$ - is this your base currency?

[joe dempsey]

Your purchase of 111,19713 cost R$ 200 - the average cost is thus 200 / 111.19713 = 1.7986 or 1.80 as shown

How did you get r$ 200 as the cost?

111.19713 x 1.62705 = 185.9999 or 186.00 not 200.00

[joe dempsey]

OK, I see now  = the average cost includes the commission costs which seem HUGE

[joe dempsey]

Your sales commission cost come to 32% - You know your broker is getting rich, while you are losing a lot of money

[Leonardo H. M]

Thank you Joe. You solved this problem!

I didn't know that the commission would affect the avg cost calculation.

Let me clarify what's happening here:

This is a retirement investment. 

My employer matches my contribution.

They use part of my (and theirs) deposit to support the retirement program. I know, it's complicated.

And I know that it is a lot of charge... but since my employer is matching my contribution it is still worth it.

I will take these charges out of the commission field and state them separately in the cash section before investing he remaining balance.

Thank you again!

[Cal Learner]

Good sleuthing, Joe.

Leonard, in analyzing the performance of this investment, If I understand correctly, it seems desirable to show an investment charge/fee/commission as a commission, because you really paid it to buy that investment. 

If this were a taxable account, such a commission would be added to the basis, against which capital gains/losses would be computed.

[Leonardo H. M]

Good point.

I must decide what to do next: live with a avg cost so distorted (but correct) and  have a consistent tax calculation OR to have a consistent avg cost.

I think that I will choose latter since tax calculation is something that doesn't work for good in MSMoney under Brasilian rules.

Thanks for this comment. Nice opportunity to think about it.

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[joe dempsey]

By my reckoning, you and your employer have spent  R$ 109,409 purchasing 38,645 units which are now worth R$ 98,000 over the period 2017-2022. It would have been better just to put the money into a savings account.

No matter what tax relief or beneifts you are getting, this seems like a very bad bargain for you and your employer - the only winner here, by a big margin, is the financiers

But this is not the appropriate forum to argue about Brazilian tax & pension fund regimes, so I will leave it to you to consider what can be done.