Brokerage CD interest and preferred stock interest not recorded as profit

Posted by louise on October 8, 2006, 2:07 am

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Using 2004 Deluxe. I'm downloading directly from Fidelity
into my Quicken brokerage account.

I have a preferred stock that pays quarterly dividends.
These are automatically put in my muni money market account
by Fidelity. I also have a CD that pays out monthly - these
payments are also placed in my Fidelity Muni money market
account.

My confusion is that these "profits" are not recorded in the
Return on Investment Year to Date column.

As a result, I do not receive an accurate % of my return on
investments even though the amount of money in my muni money
market account does increase.

Is there a way around this?

Does 2007 have a way around this?

TIA

Louise

Posted by Doug K. Le Du-Author, Preferre on November 3, 2006, 5:25 pm

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Louise-
If you are at all familiar with plugging a formula into Excel, I
suggest you track your effective annual rate of return on your own,
especially when it comes to performing this calculation correctly with
preferred stocks.

The tricky part is that most return calculations require/assume
periodic dividend payments of an equal amount. While your preferred's
quarterly dividends are, in fact, a fixed amount, this is untrue for
your first and last quarter of ownership (depending on your buy and
sell date and how those dates relate to the IPO date and the
Ex-Dividend date, respectively). Sorry to be getting a bit obscure
here...

I am an investment researcher and, several years ago, started focusing
on preferreds. I wrote a lot of research papers and a book on how to
best manage them. One of the papers is titled *Calculating Your Rate
Of Return* for preferred stocks and includes the Excel cell formula for
making this calculation correctly.

This paper is being given away for free at
www.PreferredStockInvesting.com; click on the *How Did CDx3 Investors
Do Last Month* button in the upper right of the screen. I think this
document will provide you with a way of correctly making the
calculation that you're after.

Many Happy Returns.

Posted by TomYoung on November 3, 2006, 11:30 pm

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louise wrote:

> Using 2004 Deluxe. I'm downloading directly from Fidelity

> into my Quicken brokerage account.

> I have a preferred stock that pays quarterly dividends.

> These are automatically put in my muni money market account

> by Fidelity. I also have a CD that pays out monthly - these

> payments are also placed in my Fidelity Muni money market

> account.

> My confusion is that these "profits" are not recorded in the

> Return on Investment Year to Date column.

> As a result, I do not receive an accurate % of my return on

> investments even though the amount of money in my muni money

> market account does increase.

> Is there a way around this?

> Does 2007 have a way around this?

> TIA

> Louise

I believe that the securities must have been owned on or before the 1st
day of the year for anything to show up in the ROI YTD column. At
least that was what I observed playing around in my test data base in
Quicken 2004. If I "bought" a security sometime in 2006, then entered
some income and then entered some price appreciation (stock price
increase) the ROI YTD column came up bubkiss. If I moved the purchase
into 2005 suddenly this column came to life. Maybe that's the case
here?

Tom Young