Re: Out of Pocket Method question

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Posted by Mark on June 26, 2006 at 13:25:16:

In Reply to: Out of Pocket Method question posted by jc on June 26, 2006 at 13:01:59:

: Mark,

: I am not a finance person, so I may not be able to put it as clearly as I should. Please forgive me if I don't make myself very clear. I've read the manual. And I understand that you use the OOP method for calculating portfolio cost. Is there any way for me to do the following?

: I have long-term investments that pay dividends but I have not opted to reinvest them. Can I count the dividends that I receive as portfolio gains, whether or not they are reinvested? Put differently, I put in $10000--and that's the principal. And if my portfolio increases to $10600, then that's a 6% gain for me. Even if I reinvest the $600 on my own, I still start out with $10000. The $600 dividend gain doesn't actually come out of my pocket--strictly speaking. I got the money from the company that pays the dividend. Is there a way for FM to do that? Just graph how much cash (principal) I start out with or infuse into the investment account against whatever gains or losses I may incur.

:
: Thanks.

Hi jc,

Fund Manager can calculate/display several different types of "cost". There is the "Out Of Pocket" (OOP) cost, and then there are also tax basis costs, which can often be different. The OOP cost is how much money has come out of your pocket, it is really your overall break-even point. This cost is described more here:

http://www.fundmanagersoftware.com/help/def_oop.html

The OOP cost is the cost that is graphed in all the "cost" based graphs. For example, the "Cost - Value" graph plots 2 lines, one is your OOP cost, and the other is the current market value.

Assume you invested $10,000, and then received $600 in dividends. Your OOP cost would decrease to $9,400. If instead, you reinvested these dividends, your OOP cost would not change, and remain at $10,000. In both cases the ROI yields would reflect the $600 dividend and show you the 6% gain.

Thanks,
Mark
--
Fund Manager - Portfolio Management Software

Replies:

• Re: Out of Pocket Method question jc 15:45:21 06/26/06 (1)
  • Re: Out of Pocket Method question Mark 15:58:52 06/26/06 (0)