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Posted by scott s. on May 21, 2008, 4:32 am
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> JCO wrote:
>> Are you saying... to create two accounts
>> 1. Cash Account ... this is where my monthly automatic monthly
>> drafts go too.
>> 2. Create the Mutual Fund Account
>> Then each month, do a BuyX into the Mutual Fund from the Cash
>> Account.
>
>
> No. The mutual fund is NOT an account. It is an investment held in
> your T. Rowe Price investment account. Think of it this way... You
> open an account at a brokerage. You buy and sell investments. When
> you sell off an investment, you still have the account, and you can
> buy other investments in that account. A mutual fund isn't like an
> account at all. It is one investment within an account. You can't
> buy and sell an account, only an investment.
>
> Create one investment account "T. Rowe Price Brokerage". That can
> hold cash, mutual funds, individual stocks, or any other
> investments. Transfer cash into the T. Row Price account. The cash
> should come from some other account, perhaps your checking account
> or your pay check. It should reflect what is really happening. That
> transfer will create a cash balance within the brokerage account.
> Use buy transactions within the account to buy the shares of your
> mutual fund. That will reduce the cash in the account.
>
> That is how it works in the real world. When you set up Quicken to
> mirror real world activity, it works much better, and provides the
> flexibility that is inevitably needed in investing.
>
> The way you are doing it is exactly how I did it at first. Then, I
> owned the same mutual fund in two different accounts. That was when
> I had to figure out how it really worked. Believe me, once you get
> this part straightened out in your mind, it all becomes much easier.
I don't like the single mutual fund acct either, but in the case of
T Rowe Price, you can only download transactions from a single
mutual fund, tied to the account number which is different for
each fund you own at TRP. So I use my TRP Prime Reserve since
it pays a div every month (reinvested). The other ones generally
only pay semi-annually or anually, and I don't do that much in
the way of buy / sells. That way even though they are all accounted
for in a single TRP Quicken acct it works, except that Quicken
complains that my account balances are wrong.
scott s.
.
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