Cash account or not cash account ?

[Djobydjoba]

Hello Mark,

I'm wondering if it's better or not to use a cash account in my situation.

In FM, I essentially manage mutual funds portfolios (In France, there are called "life insurance contracts"). Distributions are always redistributed. There's no real cash account at the insurance company side.

I currently work with a cash account. When I make a new contribution, it's to buy new shares of one or several funds. So, I first buy shares of the cash account, and then I record a buy in the relative mutual(s) fund(s). The cash account must be zero after that. Similarly, when I sell A fund to buy B fund, I check that the cash account is zero after the operation. With rounding errors, or funds in different currencies, it may be sometimes tricky to have the cash account at zero.

So I see the cash account essentially as a transit zone for my transactions. I see one avantage to this : the history of my transactions is clearly visible in the Data Register window > Investments (All) of the cash account, and FM automatically adds the detail of the transactions in the memo field. But i've discovered the report Invesments transactions, that could do the trick.

So I'm considering dropping the cash account. Could you tell my the pros and cons of not using it in my situation ?

Thank you.

[Mark]

Hi Djobydjoba,

I would agree that not using a cash account would be better here. It keeps things simpler, and there really is no reason, since you always have 0 cash.

[Djobydjoba]

Thank you Mark !

[dbender54]

If I did not set up an initial default cash account within a sub-portfolio when I first set up the sub-portfolio, how would I go about setting this up?

I have two situations-In one, I do no transfers between the brokerage account and a checking account (such as in an IRA), while in the other, I have both a brokerage account and a checking account, where I might transfer funds back and forth.

Any direction would be appreciated.

[Mark]

Hi dbender54,

You can assign the sub-portfolio's default cash account by right mouse clicking on the sub-portfolio, and choosing "Properties...". Only transactions recorded while the default cash account is assigned will have corresponding entries recorded in the default cash account.

[dbender54]

Hi dbender54,

You can assign the sub-portfolio's default cash account by right mouse clicking on the sub-portfolio, and choosing "Properties...". Only transactions recorded while the default cash account is assigned will have corresponding entries recorded in the default cash account.

Thank you Mark,
As a follow-up , when I am in this dialog, I should choose the checkbox 'Show All', but not select anything from the drop down list (which has a list of the securities)?

Also, since I make transfers between the brokerage account and the checking account, do I need to set up another sub-account (or sub portfolio) which is the checking account and have a default cash account there as well? When I download new transactions, will it update the transfers between the two?

[Mark]

Hi dbender54,

The "Show All" option is if you need to select a default cash account investment from a different sub-portfolio. It is most common to not have to use this. Usually your cash is being held in the same account (sub-portfolio) as you are tracking. If your cash is coming from a separate account, you can assign it to an investment from a different account, or you can just record both sides of the transactions yourself when you move money between accounts.

If you have a default cash account assigned, any distribution, buy, or sell will go into/out of the assigned default cash account. Transfer transactions do not go in/out of the default cash account.