Money for Investors

The title of this article is “Money for Investors,” but I hope you didn’t come to this part of the article expecting to find 10-, 20-, and 50-dollar bills folded between the pages. No, you have to get money for your investments elsewhere. After you do, though, you can use Microsoft Money to track your investments. In this article, you discover how to record the sale and purchase of mutual fund shares, stock shares, and bonds. You find out how to set up an electronic investment portfolio and examine the investments in the portfolio in different ways. You find out a lot of things, truth be told.

Your Own Electronic Portfolio

A portfolio is a collection of investments. After you set up investment and retirement accounts, you can click the Portfolio button and see an electronic version of your portfolio. After you have set up a portfolio like this one, recording investment transactions is easy. What’s more, the Your Portfolio window is an excellent place to start analyzing your investments.

 -  The names of the investment or retirement accounts. Create one investment or retirement account for each statement you receive from a brokerage house, each financial institution you buy certificates of deposit (CDs) or other investments from, and each retirement plan that you participate in. Doing so makes keeping the records easier because you can enter data in the account straight from the brokerage or bank statement and even reconcile your account from the statements that you receive in the mail.

 -  The names of the individual investments. After you set up the accounts, you list the names of the securities the stocks, bonds, mutual funds, CDs, and so on that belong in the account. You can then record purchases, sales, share reinvestments, capital gains, dividends, stock splits, and so on in the register.

 -  The grand total value of your investments. This sum appears at the bottom of the window, along with year-to-date capital gain and return of your investments. When your portfolio is complete, you can see at a glance the market value and price of each investment. By changing views, you can see how your investments perform, how they have changed in value, and how you have allocated them, among other things. By clicking the Analyze My Portfolio button, you can analyze investments in various ways.

Setting Up Investment, Retirement, and Employee Stock Option Accounts

Before you can analyze your investments, you need to set up an investment account, retirement account, or Employee Stock Option account. This section explains how to do just that.

Setting up an investment account for tracking securities

The first step in tracking investments is to create a new account for each institution, brokerage house, or retirement plan that you trade with or participate in. After you set up an investment account, you describe the securities that the account tracks. Spread the last statement from the bank or brokerage house across your desk and follow these steps to set up an investment account:

1. Click the Account List button to go to the Account List window.

2. Click the Set Up Accounts link. You can find this link under Common Tasks.

3. Click the Add a New Account link. After you click it, the first New Account dialog box appears.

4. Enter the name of the brokerage house or bank where you keep the account in the text box, or select a name from the drop-down list; then click the Next button. If Money doesn’t recognize the name you entered, you see the Confirm Your Name dialog box. Choose a name from the list of financial institutions’ names and click Next.

5. Select the Investment account type and click the Next button.

6. In the next dialog box, enter a name for the account. The name you enter will appear in the Account List window after you finish setting up the account. For convenience’ sake, you may want to enter the name of the brokerage house where you keep the account.

7. Click the Taxable or Tax Deferred or Tax Free option button to specify whether the money you track in this account is tax deferred; then click the Next button. Tax deferred means that you don’t have to pay income tax on the money that the account generates until you begin withdrawing it at retirement age. Probably the option button to click is Taxable. Most tax-deferred accounts are retirement accounts (how to set up a retirement account is explained shortly).

8. In the next dialog box, select the No, I’ll Do This Later option button; then click Next. A bit later in this article, in the section, “Describing the Securities in Investment and Retirement Accounts,” I show you how to record security transactions in an Investment account.

9. In the next dialog box, enter the approximate value of the account in the Investments text box Don’t worry about being accurate with these figures they’re used for planning and estimating purposes only. You can get the estimated value of the investments in the account from your most recent statement. Don’t include cash in the estimated value of the account if you keep cash as well as investments in the account. If you recently sold a security or made a deposit in the account, it likely includes a bit of cash. 10.Enter the amount of money in the account in the Cash text box; then click Next. As the dialog box explains, you can estimate the amount of money in the cash account if you want. The amounts you enter in the dialog box are used for planning purposes. 11.Select the I Have No Other Accounts at This Institution option button and click Next. 12.Click the Finish button. Deselect the Go to Online Setup for Your Brokerage Firm option button and the last dialog box. That button is for setting up Money so that you can bank online with the brokerage firm. After you set up the investment account, go to its Details window and enter the name and phone number of your broker. You need that information in case you need to call your broker. You can enter other useful information in the Details window as well. To get to an account’s Details window, right-click its name in the Account List window and choose See Account Details.

Setting up a retirement account for tracking retirement savings and investments

Follow these steps to set up an account for tracking the tax-deferred investments you have made for your retirement:

1. Click the Account List button to go the Account List window.

2. Click the Set Up Accounts link.

3. Click the Add a New Account link. You see the first New Account dialog box.

4. Enter the name of the brokerage house or bank where the account is kept or select a name from the drop-down list; then click the Next button. If Money doesn’t recognize the name you entered, choose a brokerage firm from the list in the next dialog box that appears.

5. Select the Retirement account type and click the Next button.

6. In the next dialog box, enter a name for the account and click the Next button. The name you enter will appear on the Account List window after you finish setting up the account.

7. In the next dialog box, select the type of retirement account you want to set up; then click the Next button. If you aren’t sure what kind of retirement account you are dealing with, you can click an account type in the list box on the left to see its description in the box on the right side of the dialog box.

8. If you track a spouse’s or partner’s finances with Money, choose the name of the person whose retirement account you want to track; then click the Next button. Money gets the name or names on the list from the survey you take when you install the program, but if you didn’t take the survey, don’t worry about it. Enter the name and then fill in the dialog boxes to describe yourself or your spouse or partner.

9. In the next dialog box, select the No, I’ll Do This Later option button; then click Next. Later in this article, in the section, “Describing the Securities in Investment and Retirement Accounts,” I show you how to record transactions in the account. 10.In the next dialog box, enter the approximate value of the account in the Investments text box. These figures are used strictly for planning and estimating purposes. You will be given ample opportunities to enter the exact numbers later on. Check your recent statement for the estimated value of the investments in the account. If cash is in the account at present, don’t include it in the estimated value. 11.Enter the amount of money in the account in the Cash text box. As the dialog box explains, you can estimate the amount of money in the cash account if you want. 12.Select the second option button, I Have No Other Accounts at This Institution, and click Next. 13.Click the Finish button.

Setting up an account to track employee stock options

If you are fortunate enough to work for a company that offers stock options to its employees, you can track the value of that stock with Money. To do so, create an investment account (see “Setting up an investment account for tracking securities,” earlier in this article), fill in the New Account dialog boxes, and choose Employee Stock Option when you are asked what kind of account you want to set up. By now you must surely know how to set up an account in Money. Besides the usual questions, you are asked for the date you were granted the stock, how many shares you were granted, and the strike price the closing price of the stock on the day it was given to you. In most companies, employees are not given stock outright. Instead, they become vested in the stock they own over a period of time. Use the text boxes on the New Employee Stock Option dialog box to describe how your company’s plan calls for you to be vested in the stock you were granted. When you finish setting up the account, open its register. You see future entries that describe when you will receive new stock as part of the vesture. As you update the stock price in this register, it shows the stock’s value.

Describing the Securities in Investment and Retirement Accounts

After you set up an investment or retirement account, you must describe each security in the account. Securities are the stocks, mutual funds, certificates, bonds, or other financial instruments that the account tracks. Gather the paperwork and follow these steps to describe each security that you own. If you just purchased more shares of a security that you already own and have already described in an investment or retirement account, skip ahead to “Recording a purchase of more stocks or more bonds” or “Recording the sale or purchase of mutual funds” later in this article.

1. Click the Portfolio button on the Navigation bar or choose Investing -> Portfolio to go to the Your Portfolio window. This window is the starting point for handling, managing, and analyzing investments.

2. Click the Add an Investment link. You’ll find the link under Common Tasks on the left side of the window. After you click it, the first New Investment dialog box appears.

3. Click the down arrow to open the Account drop-down list, and choose the investment or retirement account where you track the security; then click Next. If no account names appear on the menu, you haven’t set up an investment or retirement account yet. The start of this article explains how to do that.

4. In the Investment Name text box, enter the name of the security; then click Next. The name you enter will appear in your portfolio. You see the Create New Investment dialog box. In this dialog box, you tell Money what kind of investment you are tracking.

5. Select an option button to describe the security and then click Next. Which dialog box you see next depends on which option button you selected. I chose the Stock option button, so the New Stock dialog box asks me to enter the stock’s symbol. Except for bonds, Money asks for your investment’s ticker symbol. In the case of a bond, you will be asked for the coupon rate, interest paid, maturity date, and call date.

6. Fill in the New dialog box or boxes and then click the Finish button. If you can, enter the ticker symbol for your mutual fund, stock, CD, or money market fund in the New dialog box. That way, you can update the security’s price from the Internet and save a lot of time that you would otherwise spend updating the price by hand. If you don’t know the ticker symbol, look for it carefully on your brokerage statement you can usually find it there. Or try clicking the Find Symbol button to go on the Internet and find the ticker symbol.

7. In the following dialog box, enter in the Quantity text box the number of shares of the security you own. For mutual funds and stocks, enter the number of shares you own. If you are describing the purchase of a single CD or bond, enter 1. For investments such as precious metals, enter the number of ounces or other unit of measurement. You don’t have to fill in the bottom three boxes in the New Investment dialog box, but do so if you intend to track the value of the security from the day you purchased it. By filling in these boxes, you can analyze your investment to see how it has grown or shrunk over time.

8. In the Date Acquired text box, enter the date that you purchased the security; enter the price per unit you paid in the Price text box; enter the commission, if you paid one, in the Commission/Fee text box; then click the Next button. When you enter share prices of stock, you can enter fractions. For example, you can enter 501⁄2 or 101⁄4. Money converts the entry to a decimal. For bonds, enter the price of a bond as a percentage of the bond’s par value (its face value). For example, if the bond’s par value is $1,000 and its price is $950, enter 95 in the Price text box. If you are tracking the value of this security from the day you bought it, be sure to enter data about your original purchase. You may have bought more shares in the security or sold shares in the past. The value may have gone up or down. You need to enter purchase data as of the date you entered back in the Date Acquired text box.

9. Click the Finish button if you are done entering securities in the account; if other securities need listing, click the Yes button, click the Next button, and return to Step 3. Do not pass Go and do not collect $200. Repeat the seven steps for each security that the account tracks, and then read on to find out how to update the prices of the securities.