Managing "Dividends"

Andrea's Avatar

Andrea

01 Nov, 2021 11:58 AM

I have some crypto currency (USDC) which is giving me weekly interest, which is payed back in the same currency: basically, I lock X USDC for 3 months, and every week I am getting back some USDC coins. I am trying to model this in MoneyDance 2021 as DivReinvest (Dividend income with funds used to purchase more share), because I think it's the closest one to what's happening here. However, the problem is that if I do that, both "Portfolio Value" and "Cost Basis" go up, therefore messing up with my stats. I would expect only the Portfolio value to change, as I now have more coins, and not the cost basis (since I haven't used any "new money" to buy those coins). Any idea of what I am doing wrong?

  1. 1 Posted by Stuart Beesley ... on 01 Nov, 2021 12:49 PM

    Stuart Beesley (Mr Toolbox)'s Avatar

    The coins (as dividends) do cost you you money (your dividend)... This means the Cost Basis should increase... The alternative (same result) would be:

    Div = +cash into account
    Buy x coins = qty_coins+, cost+basis+, cash-

  2. 2 Posted by Andrea on 01 Nov, 2021 04:28 PM

    Andrea's Avatar

    That's a very valid point, I didn't think about it. Any workaround you can think of? Basically what I want to do is to see the gain/loss against the capital I moved from my bank account to the investment account. If I don't that, the gain will look diluted (if I get a lot of dividends, and I keep reinvesting them, the gain will show as 0%)

  3. 3 Posted by Stuart Beesley ... on 01 Nov, 2021 06:11 PM

    Stuart Beesley (Mr Toolbox)'s Avatar

    Offhand not really. You can see the ‘gain’ by reporting the dividends (probably on the investment performance report)

  4. 4 Posted by Andrea on 01 Nov, 2021 09:51 PM

    Andrea's Avatar

    Thank you Stuart, appreciate the feedback!
    Andrea

  5. 5 Posted by Stuart Beesley ... on 01 Nov, 2021 10:22 PM

    Stuart Beesley (Mr Toolbox)'s Avatar

    Think of it this way. If they paid you the div you would have the cash. So how do you see the gain? Well you report on the dividend income. So this is exactly the same for your example. It’s irrelevant that you bought more coins with the div.

  6. 6 Posted by dwg on 02 Nov, 2021 02:05 AM

    dwg's Avatar

    I'm a fellow user.

    With Investments there are two aspects you can look at, the first is gains which are more accurately referred to as Capital gains. In simple terms this is the different between what you paid for the shares and what they are now worth or were sold for - hence you can have realised capital gains (received) or unrealised capital gains (on paper).

    Dividends are an income event not a capital event.

    When you want to look at both capital gains and income you are looking at Return on Investment. (ROI) but this is not strictly relatable back to the initial investment since there are later purchases through reinvesting dividends and some of the dividends will relate to the later purchases.

  7. System closed this discussion on 01 Feb, 2022 02:10 AM.

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