Quicken Investment Recordkeeping Tricks

Quicken provides powerful investment record-keeping tools for individual investors. Unfortunately, once you step beyond investments like stocks, bonds, and mutual funds, the mechanics can get a little tricky. Here are some tips for handling common investments in Quicken.

Certificate of deposits

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If you purchase a certificate of deposit, you can treat it in the same way that you treat a bond purchase. Basically, certificates of deposits, or CDs, are just bonds issued by banks or financial institutions often for a shorter period of time. For example, you can think of a two-year CD as equivalent to a two-year bond.

Zero coupon bonds

If you invest in bonds, you may know that some bonds don't actually pay periodic interest. Instead, these bonds, called zero coupon bonds, pay their interest when the bond matures. For zero coupon bonds, you need to annually accrue the interest on the bonds. The annual interest needs to be accrued because, by convention, you report the annual increase in the zero coupon bond's value as interest earned.

To record accrued interest on a zero coupon bond, record bond interest that accrues in the normal way. In other words, whatever amount shows as being accrued--this should appear on the statement from your broker--record it as bond interest income.

After you record the bond interest that's accrued, you need to record a return of capital transaction that adds this accrued interest back to the value of the bond. The amount of this capital transaction, obviously, needs to equal the accrued interest amount. But there is a twist here: You need to specify the return of capital amount as a negative value. For example, if you accrue 0 of interest on a zero coupon bond, you also need to record a return of capital transaction for the bond equal to -0.

By recording the return of capital transaction, you in effect transfer the bond interest money from the associated cash account and add it back to the zero coupon bond's value. In this way the associated cash account shows the correct cash balance and the zero-coupon bond shows the correct cost basis. The zero coupon bond's cash basis equals the original purchase price plus all the accrued interest that's been recorded to date.

Derivatives

Derivatives are securities that derive their value from some underlying security. For example, an option to sell a stock, called a put, is a derivative. It derives its value from the underlying security. Another derivative is an option to buy a stock, called a call. You can use Money to keep records of derivatives, such as puts and calls you buy.

In general, derivative record-keeping is quite straightforward. If you buy a derivative, say a put or a call, and later sell the derivative, you simply have a normal investment transaction. You treat the purchase and later the sale in the same way that you treat the purchase and sale of any stock. If you make money, you realize a gain. If you lose money, you realize a loss.

If you buy or sell a put or call and hold the option until it expires, things work almost the same way. However, in this special case, you do need to record a Final Sale transaction, and the sales price is zero. Obviously, if you hold a put or call until it expires, you don't actually sell the derivative. But you need to record a sale transaction to reflect the fact that the option is no longer worth anything.

These are the basic techniques you need to know for put and call record keeping--and record keeping for similar derivatives--but there are two special circumstances in which more complicated record keeping is required.

Selling Puts and Calls

If you sell puts and calls--note that the earlier discussion involves you in investing puts and calls--you need to record the option as a regular buy or sell transaction. In other words, if you sell a put and the person to whom you sell it exercises the put, you record this transaction as a regular sales transaction. Similarly, if you sell a call, you record the transaction as a regular buy transaction.

If you sell a put or call option and the option never gets exercised, you record the amount of money the buyer pays you as Other Income.

Exercising Puts and Calls

Typically, individual investors don't actually exercise puts and calls that they buy. Instead, they simply sell the option back to the broker. However, you might end up exercising a put or call, and in this case, you need to perform special record keeping.

To record the exercise of a put option, record the sale of the put option at a price equal to zero. This zero-value sale is how you record the expiration of the option. After you have recorded the expiration of the option, you record the sale of the stock in the same way that you record the sale of any stock. Remember that a put is an option to sell stock.

To record the exercise of a call option, record the sale of the call option at a price equal to zero. This zero-value price lets you record the expiration of the option. After you have recorded the expiration, you record a regular buy transaction. Remember that a call option is an option to buy a security.

Precious metals and commodities

You can treat investments in gold and other precious metals, gold coins, agricultural items, and other commodities in the same way that you treat shares of stock. Rather than entering a share price, you enter a price per ounce or a price per bushel. And rather than recording a specific number of shares, you enter a specific number of whatever unit of measure is used to describe the commodity. In the case of gold, for example, you might enter the number of ounces. In the case of an agricultural item, you might enter the number of bushels.

You can treat options to buy or sell commodities in the same way that you treat options to buy or sell securities. The earlier discussion on handling call and put options discusses the techniques you use for this record keeping.

Quicken Investment Recordkeeping Tricks

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Gold Krugerrands As an Investment

In 1967, the government of South Africa minted the gold krugerrand to increase the marketing of South African gold. Although the krugerrand is considered as legal currency in South Africa, it is rarely used for that purpose. Instead, it has become a favorite of coin collectors all over the world, known as "medal coins." This was the first coin to be valued at the monetary value of gold, or the current rate of gold prices. For example, a U.S. silver dollar is worth exactly one dollar unless it is unusual in some way that makes it more valuable to collectors. The krugerrand was originally a one-ounce piece of 22 carat gold with no monetary value imprinted on it; its value is based upon the market gold price that frequently fluctuates. Today krugerrands are made in a variety of weights, including half-ounce, quarter-ounce and one-tenth ounce.

Coin dealers and collectors often obtain krugerrands through estate sales. The price that the dealer or collector will pay depends upon the current gold market price on that particular day. For example, imagine that a family man invests in buying 100 krugerrands when the gold prices are 0 per ounce. When the man dies ten years later, the value of the krugerrands will be based upon gold prices at that time. Like any investment, buying gold krugerrands is never a "sure thing." When the man dies, gold may be priced at 0 per ounce, meaning that the family will have lost money on the investment. However, gold prices may well be 0 per ounce, giving the family a sizeable return on the investment if they decide to sell the krugerrands. In cases like this, probate attorneys recommend that surviving heirs consult a coin dealer about the fluctuation of gold prices; knowing when to sell and when to hang on is a matter that requires professional consultation.

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If you buy gold krugerrands as an investment, keep in mind that these coins are 22 carat gold; an extremely high grade in quality. Pure gold, at 24 carats, is too soft to be minted so it is "cut" with various amounts of metal to make it hard enough to mint. Novice investors often make the mistake of comparing the gold prices for jewelry items made from 18, 14, or 12 carat gold with the gold price or market value of the 22 carat krugerrand. All gold is not created equal!

The South African krugerrand was the prototype model for other one-ounce coins like the Canadian Gold Maple Leaf, the Australian Nugget, the Mexican Gold Peso, and the United States Golden Eagle. Since these coins are not as widely available as investments as the krugerrand is, they are sometimes subjects of counterfeiting. Have a coin consultant investigate the current gold price, the authenticity of the coin, and the coin's carat weight.

Gold Krugerrands As an Investment

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The 4 Types of Investment Silver

When starting a silver investment, there are 4 major forms of silver to consider investing in:

1) Coins
2) Bars
3) 90%
4) Loose

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Coins

Coins can be generic or collectible. Generic coins are often known as "rounds." Collectible coins are often called "numismatic" coins, a hobbyist term based on the Latin word "numisma" for coin.

Generic coins, or rounds, are generally produced by private mints who create coins with interesting designs, but have no rarity or special value associated with them. They are commonly printed with the words ".999 Fine Silver" and "One Troy Ounce" to make the contents of the coin clear. The value of a round is based on the content of the precious metal, not for the condition or rarity of the coin.

Numismatic coins are almost always more expensive to buy than generic rounds and usually receive a premium price when you go to sell them. Like generic rounds, they often indicate the purity and weight of the metal on the coin, but unlike generic rounds, they have a perceived value to the public beyond their precious metal content. These coins are often sealed in air-tight packages and have a professional numismatic association rating associated with it.

Examples of numismatic coins include the American Eagle, and the Canadian Maple Leaf coins. Each of these coins typically demand a price 10%-20% higher than a generic coin of the same weight and quality. Some items are very rare, and demand a price that makes their precious metal content insignificant as far as their value is concerned, such as the 1804 Childs silver dollar that sold at auction for over million.

In general, investors prefer generic rounds over numismatic coins. While coin dealers sell American Eagles at a premium, for example, they will often not pay the same premium when you sell the coin back to them.

Coins may be bought in bulk from large dealers, or may be purchased by the ounce in coin shops across the country. Nearly every county in the U.S. has at least one coin shop, and their inventory may contain dozens of items, or may be completely sold out in times of high investor demand.

Bars

Many investors prefer bars for their investment. They are easier to stack and store than coins, and are available in much larger weights than the typical one ounce coin. Bars are found in one ounce, five ounce, ten ounce, 100 ounce, 400 ounce, and 1000 ounce varieties in the U.S.. Bars may also be found in odd weights such as 105 troy ounces, but this would still be considered a "hundred ounce" bar. When you buy bars, you are charged for the actual weight of the bars you buy.

Certain companies manufacture bars specifically for investing such as Johnson Matthey, or Engelhard, and these bars are beautifully designed and polished for viewing. The other type of bars you will find will be a plain looking block with the weight of the bar, ".999," and perhaps the minting company's logo roughly stamped on it. These bars are meant more for industrial uses instead of the investor, but have basically the same value to the investor as the nicely designed and polished bars. On the open market, the "investor" bars might carry a slight premium, but for the most part, bars of equal weight carry the same value.

Bars are more rare to find in coin shops than rounds, but they are available from time to time. More likely, you will purchase bars from a large dealer over the phone or online. Popular retailers include APMEX, Bullion Direct, and The Tulving Company.

90%

U.S. coins minted before 1965 (except nickels and pennies) contained 90% silver and about 10% copper. Back in the old days, our money represented something we could melt down and would actually be a valuable metal. From 1965 to 1971, the United States cut back on silver use to a 40% formula for coins, and after 1971 the precious metal content was gone.

Bags of 90% silver coins may also be found in coin shops or at auction on eBay. Again, there are some coins valued purely for their metal content, and some are valued because their date of issue has become rare and fall into the numismatic category. Again, investors mostly stay clear of numismatics because generic coins are easier to sell at their full potential value.

Loose

The final category of investment silver is metal that is loose. Many investors obtain items that were perhaps meant for industry, or have been packaged in unique ways. For example, recently one of the major online dealers ran out of rounds and bars, but was willing to sell silver "shot." This was simply small ball-shaped pieces tossed into a bag. Other possibilities include wire, or sheets that were clearly meant for some industrial use. Or perhaps you have inherited some sterling dinnerware that has no collector's value.

No matter what market it was created for, when it reaches your hands it is still valuable as an investment. Sterling contains only 92.5% of the precious metal, so it is not as valuable as the "fine" 99.9% variety, but don't sell it in your garage sale. These items will be more difficult to sell than coins or bars, but coin shops, scrap yards, and eBay are all dependable options to receive 80%-95% of the precious metal's market value you hold.

The 4 Types of Investment Silver

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Bullion - What is It? And is it a Good Investment?

Bullion refers to any precious metal in a form where its primary value comes from the worth of the metal it's made from, and not from an artificial currency value. Bullion is most often traded as a commodity or as coins minted by national governments, or in bulk ingots.

Governments issue coins which have a nominal value assigned to them when they are minted, this value is virtually always clouded by the commodity value of the metal itself. For example, most government issued gold coins have a currency value of between USD and 0USD, but normally contain at least one troy ounce of gold, Silver, Platinum or the metal they're minted in. Given that the exchange rate of gold, Silver or any commodity rises and falls over time, as do other things in the stock market. They are a good investment, and better than most because of their stability. From the beginning of the twenty-first century as an example, Gold was worth about 0USD per troy ounce, at the closing of the market on 8/1/08 it's value was 2.50USD, and in contrast Silver a year ago was worth $12.00USD and closed on 8/1/08 at .47. So it can be can seen that the government- assigned currency value of a bullion coin is essentially meaningless.

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The value of bullion is determined by three factors: the metal, the weight and it's purity. The metal the bullion is comprised of is obviously important in determining its overall value: gold is worth more than silver, while platinum is worth more than gold. Platinum by the way closed on 8/1/08 at &1.675.00USD. The weight of bullion is commonly measured in troy ounces, where one troy ounce is equal to approximately 31 grams. Purity also varies widely in bullion, though many countries release coins with 99.99% purity, which is as close as one can get to pure.

The general minting of a bullion coin is less than 10,000, and the reason they are so popular with collectors. A high degree of limited issues are also relatively frequent, sometimes as few as 20 to 50 of a certain bullion coin are released. Silver Coins, are especially popular with collectors; because of the relatively low price of the metal, and they are collectible at a lower price in general. For this reason, silver bullion coins, more than gold or platinum, are often valued substantially above the market value of silver.

Today, most major countries proffer at least one type of bullion coin. Normally these coins will have one main symbol they use each year, though some nations choose to keep the same theme but alter the image annually.

Some examples of bullion coins include:

U.S. Eagles: Minted in platinum (since 1997), gold and silver, these coins are embossed with the image of a bald eagle. Gold Eagles are 91.67% pure.

Canadian Maple Leafs: These coins are minted in platinum, gold and silver, with the Canadian maple leaf embossed. Gold Maple Leafs were the first 99.99% pure gold coins to be released. A very limited platinum coin is also released by Canada, depicting wildlife.

Chinese Pandas: These come in platinum, gold, silver, palladium, copper and brass. The depict a panda bear, the image of which changes each year. China also had a short-lived series of unicorn gold and silver coins, and a limited run of twenty bullion coins in excess of 260 troy ounces (8 kilograms).

South African Krugerrands: These were the first bullion coins ever released by a nation, and are made of gold.

As you can see as a trader or collector these bullion commodity and coins are a very desirable item.

Bullion - What is It? And is it a Good Investment?

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