How should investments be recognized on a balance sheet?

I am using Tiller to track my personal expenses, some of which are long-term investments in stock or real estate, for example. My goal is to show my Inflows (income) and Outflows (expenses) at a glance.

When I make a $20,000 stock purchase should this be considered a:

Category: Stock purchase
Group: Investments
Type: Expense

And when I sell a stock throughout the year should this be considered a:
Category: Stock sale
Group: Investments
Type: Income

@hbwilliams22

Perfect timing. Today, I spoke with the owner and development team of a software company about many issues, including this specific item.

  1. When you make the purchase, cash gets reduced and you create an asset. When you sell, cash gets increased and the asset gets reduced. The cash you receive on sale needs to be broken out between basis (your cost) and gain/loss. If you buy for 20,000 and sell for 21,000, then you have a 1,000 gain. Split the 21,000 into two pieces. 20,000 is coded to a transfer category. 1,000 is coded to an income category.

  2. Is the asset in a taxable account or a retirement account? If it is in a retirement account, you might decide to code the 1,000 to a transfer category. However, likely you will just code both the 20,000 and 21,000 to transfer categories and be done. Really, who cares about income in a retirement account. Generally, you have income, if at all, only when you take a distribution from the retirement account…

  3. Is the investment held in a brokerage account, or other account? If yes and you link the account, Tiller will automatically track the asset via Balance History. If not held in an account that is linked, then you need to track it as a manual asset via Balance History.

Please let me know if there is anything else.

Thanks,

Blake

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OK thank you. This is how I was planning on doing it. A bit complex and room for error but it is what it is!

I don’t have the need to track all the detail so what I do is create a new category called investment and mark it as hidden. Any dividend or other activity I categorize as that. This keeps the noise out of my budget and allows me to only track the overall balance of my investments. For details on my investments I use my brokerages tools.

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This is what I am doing for now. Additionally, I have a pivot table that shows my “investments” but it stays out of my core budget view with “hidden”.

Trying to include the cost basis, profit etc. of a stock sale is too much work and, as you mentioned, brokerage tools are good for that.

@hbwilliams22

If the investments are in a taxable account, then it makes sense to show any gains and losses in Tiller. If in a retirement account, then pass.

Blake

@hbwilliams22

Like how you Categorize as either ‘Stock purchase/sale’ and Group under ‘investments’.

However, for Type I treat these transactions as Transfers as its not really an expense when you buy stock, nor is it income when you sale stock. Rather its a transfer of cash to stock when you buy, and from stock to cash when you sale.

Agree about brokerage tools for cost basis, capital gains reporting as well. Would take me much longer to set up/track in Tiller than login to Vanguard, retrieve the info and input into a spreadsheet. This is my 2 cents.

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Please let me elaborate. You buy for 20,000 and sell for 21,000. When the 21,000 shows on the transactions tab, you can split it. Look at your brokerage statement and you will see that the gain is 1,000 so split it into 20,000 and 1,000. Or you can code the 21,000 to transfers, hide it, or delete it and then add the 1,000 manually. Both ways probably take the same amount of time so chose which ever one is easier.

Blake

This is the workflow we recommend to folks for a simple method to prevent it inflating cash flow in the Foundation budgets. You might have two categories if the investment accounts are also linked. The inflow (to the investment account) would be a hidden income category, and the outflow (from your checking acct for example) would be a hidden expense. If you use transfers they’re hidden by default.

We hope to offer position history data in the future for more granular investment tracking. We also have a quick resource on the Help Center (which will probably soon move into the Community due to the experimental nature of it).

Still probably not as good as brokerage tools.

@richl I am curious: do you include taxes (like dividend taxes or property taxes etc.) in your primary budget view or do you hide these as well? For now, I am hiding all taxes as my annual budget calculation includes these expenses before I arrive at my monthly budget.

I use my budget to track anything related to my cashflow. So If I know I will have to write a check eventually, than I budget for it ( like Property Taxes) and accrue money for it each paycheck/month.

I dont however, track my taxes from paychecks, dividends. I am sure others do and have great ways to track. I just dont have that need. Hope that helps.

OK, so when you are looking at a monthly inflow / outflow view for instance, your property tax is listed as an expense just like your groceries are.

I do not budget but I track everything running through all of my accounts. Regarding property taxes, many people that have a mortgage might be escrowing for them meaning some part of their monthly mortgage payment is going towards property taxes. Regarding income taxes, many people might not track it as most of it is covered via withholding by their employer. Blake

This sounds like a good solution that richl has provided and I will implement it for now… But it seems like over time this is going to really inflate the number of transactions in the transaction tab.

I think another solution would be better… Couldn’t the “Tiller Money Feeds” tool be modified so that we could have the option to download balances without downloading transactions for certain accounts? I think that would be ideal.

I posed this question elsewhere but never got a response from Tiller…

@Blake What about estimated tax payments for dividends? I pay these quarterly.

Do you live in TN? Yes, track those taxes. I make federal and state quarterly income tax payments and I track those. I also strip out the taxes from paychecks using the splitter tool. Blake

Edit - Please elaborate on paying taxes on dividends.

I live in Georgia. Based on my quarterly estimated dividend income, I pay my taxes forward each quarter.

OK.

FYI - If you file MFJ and your federal taxable income is less than about $78,000, any dividends would not be taxed.

Im married and our joint income outside of dividends exceeds $78k. I don’t believe I qualify for MFJ :unamused:

So, you are at least in the 22% federal marginal tax bracket but the federal tax rate on those dividends is 15% which is a preferential rate. Cheers, Blake

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