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Transactions / Re: Unable to download transactions from Vanguard
« Last post by Forum Administrator on July 01, 2020, 08:19:58 AM »
We've released the v3.2.1 update to Investment Account Manager 3 Individual. This update includes several important changes, corrections and new features. Also included are modifications to IAM3 Individual that have resolved the issues due to changes made by Vanguard access to once again allow for transactional downloads.  To download this latest update, please follow these steps:

• open your copy of Investment Account Manager v3 Individual.
• select the 'Check For Updates' choice located on the menu bar. This choice will verify that you are using the latest version of IAM3 Individual.
• if not, you'll be prompted to download the latest maintenance release.
• note: If the choice to ‘Check for Updates’ is inactive in your copy of Investment Account Manager v3 Individual, this indicates your technical support period has expired.
• if your support has expired, you can extend technical support for an additional year, by clicking here  https://www.investmentaccountmanager.com/products/product-category/support-individual/.  When ordering your support renewal, you will need to enter your IAMv3 user ID number as shown on the IAMv3 Help Menu | Product Support Screen.



12
Transactions / Re: Unable to download transactions from Vanguard
« Last post by Forum Administrator on June 29, 2020, 11:01:21 AM »
    Hi Mark,

    Vanguard has changed its authentication methods.  We are working on a solution. For the time being:


    Open the Vanguard web page.
    From My Accounts, choose Transaction History.
    At the top right of the page, choose download.


Download Options are:
1.       Account Type: Choose Quicken
2.       Choose Data Range
3.       Choose an Account (Choose one at a time)
4.       Download and save the file

Import the file into Investment Account Manager under IAM's Transaction Menu
| Import OFX.  If you have add'l questions, please email our tech support team directly:

techsupport@investmentaccountmanager.com

Regards,

Matt

13
Transactions / Unable to download transactions from Vanguard
« Last post by markrtuttle on June 27, 2020, 09:50:01 PM »
I'm unable to create a portfoilo and download my transaction history from Vanguard. 

I go to file -> new portfolio -> download from financial institution -> download all available historical activity, I enter portfolio name, I choose financial institution Vanguard Group and I enter my username and password for the vanguard.com web site, I click connect, and I get

An error message was received from your financial institution.  The title of the message received is "no title shown." To view the error, open the file OFX_Error.html in your web browser.

I have no idea how to proceed. I have no idea where the file OFX_Error.html is.

I are running the demo version of IAM that I just downloaded to try out.

Thanks,
Mark
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Announcements / Blog Post - Putting Performance Into Perspective
« Last post by Forum Administrator on June 02, 2020, 02:22:43 PM »
The year 2019 was a great run for the S&P 500 Index. Its 12-month total return of 31.49% was more 3x higher than its 50-year average annualized return of 10.60%. All good, right?

read more: https://www.investmentaccountmanager.com/products/putting-performance-into-perspective/
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Support / Re: Inaccurate IRRs
« Last post by Forum Administrator on June 02, 2020, 02:18:34 PM »
Looks as if you are misunderstanding...  if you receive dividends, these are positive cash flows that contribute to the IRR calculation.  If you reinvest these dividends, then in addition to the income component on IRR, so too will be the change in value of the reinvestment.  The formula used for IRR is below, an it is accurate and correct.  We also further geometrically link IRR for sub period returns and closer GIPS compliance.  Please contact our tech support team directly if you have add'l questions: techsupport@investmentaccountmanager.com

Internal Rate of Return (Modified IRR Method)

The internal rate of return calculates return for the period taking into effect the exact timing of each cash flow. The model properly weights the timing of cash flows (additions/ withdrawals) for a portfolio or an individual asset, for a selected date range, to provide the return calculation. Internal rate of return can be equated to the compounded effective interest rate that a savings account would have had to earn in order to reach the portfolios' current present value including all investment flows (purchases, sales, income, interest, reinvestment, etc.), while adjusted for timing of the specific flows.

Key variables in the model include: Beginning Market Value, Ending Market Value, Income, Reinvestments, Sum of all Cash Flows within the period (additions/withdrawals), and Weight Factor (# of total days in the period that the cash flow "F" has been in, or out of, the portfolio). The return derived here can then be stored to be used in 'linking' returns.

The calculation is:

MVE = Summate Fi(1+R)^Wi

(^ denotes raised to the power of)

where:

MVE = the market value at the end of the period (includes any interest or dividends earned but not withdrawn, i.e. reinvestments, etc.).

MVB = the market value at the beginning of the period, (includes any interest or dividends earned but not withdrawn, i.e. reinvestments, etc.).

Summate F = the sum of the cash flows within the period (contributions to the portfolio are positive flows, and withdrawals or distributions are negative flows). The market value at the start of the period is also treated as a cash flow at the beginning of the period, i.e. MVB = F0.

R = the internal rate of return.

Wi = is the proportion of the total number of days in the period that the cash flow Fi has been in (or out of) the portfolio. The formula for Wi is:

   Wi = [CD-Di] / [CD] (this is the weighting component)

   where:

CD = the total number of days in the period.

Di = the number of days since the beginning of the period in which cashflow Fi occurred.
 
IRR is derived by selecting values for R and solving the equation until the result equals MVE. For example, if there were a total of three cash flows for the period (including the beginning market value treated as F0) - there will be three terms in the computational formula:

MVE = F0(1+R)^W0 + F1(1+R)^W1 + F2(1+R)^W2 .

The first term deals with the first cash flow, F0, which is the value of the portfolio at the beginning of the period (MVB). Wi is the proportion of the period that the cash flow Fi was in (or out) of the portfolio. Because F0 is in for the whole period, W0 = 1. The larger the value of Fi in the term, the more it will contribute to the total. But the smaller the exponent (i.e., the value of Wi), the less the term will contribute to the sum. This usually means that the first term, with a large F0 and W0 = 1, will contribute far more than the other terms.

Source: Global Investment Performance Standards Second Edition (2006),  Charlottesville, VA 22903, pg 87-88.




16
Support / Inaccurate IRRs
« Last post by eliyarborough on May 30, 2020, 01:01:20 PM »
Looking at the way the performance report works, it appears to me that it underestimates IRRs by adding dividends to the "contributions" to a portfolio.

Is there a setting to use where you can calculate an IRR without having dividends counting as a contribution?

For example - If I put $10 into an account on Jan 1st, and immediately bought a stock called DIV for $10, and that stock paid $5 in dividends over the course of the year and traded for $10 at 12/31... the way IAM currently has it set up is that:

Contributions would = $15 ($10 + $5 of dividends)
Appreciation would = $0
Dividends would = $5
And Ending Portfolio value would = $15

However, this seems incorrect to me. Both my broker tax preparation software report this as "Contributions = $10."

Can anyone help me understand why IAM does this and how I can correct this when calculating my returns?
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What’s the key to making good investment choices? It isn’t necessary to understand the inner workings of the securities markets or the mathematical economies underlying investment theory.  Instead, 10 axioms of effective investing provide the critical cornerstone for guiding investment philosophy and making decisions. This will ensure that you meet the universal goal of creating financial wealth for retirement.

read more: https://www.investmentaccountmanager.com/products/reach-your-retirement-goals-by-following-10-basic-axioms/
18
Reporting / Re: net of fees performance reporting
« Last post by Forum Administrator on April 30, 2020, 05:58:58 AM »
Both IAM Individual and IAM Professional will include in the performance calculations any expenses/fees occurring within the time period, as well as all other investment flows.

If any add'l questions, please contact our technical support team:

techsupport@investmentaccountmanager.com

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Reporting / net of fees performance reporting
« Last post by thenoser on April 29, 2020, 02:54:15 PM »
can iam or iam pro produce net of fees performance reports?
20
General Discussion / Tax planning with Investment Account Manager
« Last post by Peter Willms on April 09, 2020, 11:12:25 AM »
One of the many benefits of using Investment Account Manager is its ability to utilize investment record keeping in a manner to be able to access the information to improve decision making. This ability is particularly useful when making tax conscience decisions. An example of this ability can be found in IAM's many useful tax planning and monitoring tools and reports.

A primer:
Investors will find their portfolios consist of many different asset types, purchased over time, and therefore having different capital gain or losses sale consequences. Since capital gains are taxed in non-deferred accounts, albeit at a lower rate, the investor musts weigh the tax consequences of sales. If capital gains can be minimized, by offsetting realized gains with losses, then the capital gains tax is deferred, allowing the principal amount to grow.

Consider the following example. Investor A sells a stock with an original cost basis of $1000 for $2000, realizing a substantial gain. If the investor pays a federal tax rate of 15% on capital gains, the after-tax investable amount is $1,850. What growth rate is needed for the $1850 to grow to $3700 over 7 years? 10.4%. What growth rate is needed for $2000 to grow $3700 over 7 years? 9.2%. The point is that paying the tax any sooner than necessary reduces the amount of principal working for the investor. By smartly using lot-by-lot accounting when selling securities, investors attempt to offset gains and losses thereby deferring the capital gains tax.

Investment Account Manager provides lot assignment when making partial sales — either FIFO (First In First Out), Specific ID, Average Cost Method (for mutual funds and Canadian citizens), and Minimum or Maximum Gain.

Lot assignment when making partial sales:
Prior to selling a partial amount of a security, review IAM's Security Basis Report. This report will list, showing in a lot-by-lot view, each purchase you have made in the portfolio. With this information in hand, you can effectively specifically identify which lots to use in a partial sale.

Specific identification allows you to manage the amount of capital gains that will be recognized, thereby managing the capital gains tax that will be due: i.e., if trying to minimize realized gains, then select those lots having the highest cost basis. Note: you must notify the financial institution executing the trade as to which purchase lots to use if you choose the IRS Specific Identification Method.

Now is a good time to consider tax-loss harvesting:
To date, 2020 market performance has been extremely volatile. As such, investors may find opportunities to harvest tax losses.  You may have investments that you are carrying at a paper loss. Now is an appropriate time to review these positions and consider either selling these losers to move into more fundamentally sound securities, and/or to double-up on your positions for 31 days.  After the 31 days, sell the original lots to realize the losses to offset capital gains (IRS rules permit investors to offset gains with losses – see IRS publication 551 https://www.irs.gov/publications/p551 )

Examine your asset allocation:
Extreme market volatility will also cause asset allocations to change. For example, is the current allocation in line with your targeted goals for portfolio asset mix (cash v. bonds v. stocks)? Investors should now take the time necessary to review and identify any rebalancing changes necessary to reach long-term goals, while managing the tax consequences of their activity.   
.
Taxable vs. tax deferred accounts:
As part of effective portfolio construction — taxable vs. tax deferred accounts, decisions are needed to choose which securities belong in which portfolios.  Since IAM provides for multiple portfolio management, it is the ideal tool for segregating your various accounts, while still allowing for the combination of any or all of your portfolios on the various reports. This is particularly useful when managing portfolios and planning to hold investments in the most tax preferred account.

For instance, it may be wise to hold stocks providing qualified dividends in your currently taxable account, while holding stocks that do not provide qualified dividends (i.e. Real Estate Investment Trusts) inside your tax deferred retirement accounts.

Optimize gift and estate planning strategies:
IAM's lot-by-lot cost basis accounting provides an essential element for optimizing gift and estate planning strategies. For instance, after checking with your financial advisor, you may determine that you wish to donate a security(s) to a charity. Since investors often have multiple purchase lots of the same security (IAM summarizes your lot-by-lot accounting on the Security Basis Report), you may find it advantageous to donate those purchases with the lowest cost. Why? When gifting to a qualified charity, the value of the gift is usually based on the market value at the time of the gift, including the unrealized capital gain, and not the cost of the gift. In other words, you will be giving away a larger capital gain that otherwise would have been taxed if you sold the securities and then gifted the proceeds.

Likewise, when gifting to individuals, it may be useful to gift securities with the lowest cost basis, particularly if the recipient is in a lower tax bracket than the donor. The recipient may not only be able to defer the gain for a longer time, ultimate tax will be might also be lower. With lower market prices, gifts might be increased.

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