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Budgets and Investment Income RRS feed

  • Question

  • Unless I have missed a trick, Money does not make it easy for retired folk to 'Budget' to live off their 'Investment income'. Net worth increases when a dividend is received and recorded as an investment transaction, but that will not appear as 'Income' in a budget. I have found one way to resolve the Budget is to schedule regular transfers of dividends from the cash element of an investment account to a regular bank account. Of course 'Total contributions to Long-term Savings' (within the Budget Planner) will show as a negative number - but this is logically quite correct - since these are a positive flow from Long-term Savings (accounts). Perhaps later versions of Money handle budgets and un-reinvested dividends better ~ I am using Version 8.0.14.1015 ~ but does anyone know a better way.

    Teabag2

    Saturday, June 22, 2013 3:57 PM

Answers

  • Thanks Cal.  I actually have each shareholding (*** plc) in its own separate investment account, a dividend receipt hops twice on its way to my regular bank account, leaving the associated (investment) cash account at zero or thereabouts. As you say, it is not possible to balance the cash in an investment account but I don't find that a problem. For me selling is a rare event and it never involves regular (set up in bills) transactions. Whilst selling does not change my Net Worth, it does of course change what I have available to spend. Ultimately I agree with you, Money budgeting does not add much, though by saving Budgets for each financial year it is subsequently possible to look back and get a different and occasionally useful view on ones financial progress. Thanks for your thoughts.    
    Sunday, June 23, 2013 5:15 PM

All replies

  • I have never used Money budgeting, except for some experiments. If you try this idea, keep two Money files with  separate methods for a while in case this has some disadvantages that outweigh the advantages:

    Here is the (maybe bad) idea... have the "Transfer To" field of the Dividend transactions point to the/a regular bank account. Money should continue to use that destination for dividends until you change it. Maybe create a new Money bank or cash account for the purpose, rather than use your existing regular account. That way you could have this non-investment cash account actually reflect the cash value of your account. Now what will you do when you Sell a security? If you make the proceeds of that to go to this cash account, that will make the whole proceeds look like income. Anyway, just consider this to be something to experiment with in a separate copy of your Money file.

    Regarding the transfers from the cash account of the investment retirement account (presuming that you are tracking Investment cash transactions now), that may be as good a way as any, except it will not let you balance the cash in your investment account.  http://umpmfaq.info/qselect.php has some budget items, but I don't think it address your issues. It does help make the distinction between budgeting and cash flow. I don't remember ever seeing anybody who was a real fan of the budgeting.

    Saturday, June 22, 2013 5:07 PM
    Moderator
  • Thanks Cal.  I actually have each shareholding (*** plc) in its own separate investment account, a dividend receipt hops twice on its way to my regular bank account, leaving the associated (investment) cash account at zero or thereabouts. As you say, it is not possible to balance the cash in an investment account but I don't find that a problem. For me selling is a rare event and it never involves regular (set up in bills) transactions. Whilst selling does not change my Net Worth, it does of course change what I have available to spend. Ultimately I agree with you, Money budgeting does not add much, though by saving Budgets for each financial year it is subsequently possible to look back and get a different and occasionally useful view on ones financial progress. Thanks for your thoughts.    
    Sunday, June 23, 2013 5:15 PM