Money Market/Cash Balance question

[Guest]

I'm using Quicken 2004 for Windows.
I created a new investment account by downloading information from the
financial institution where the account is managed.
Cash and dividends are swept into two money market funds.
These money market funds appear correctly in the list of holdings, but
there is no indicaiton that they are money market funds.
I created a linked cash flow account because I write checks on the
account, and want to keep track of them in register form.
Dividends/deposits etc. were properly debited from the investment
account and credited to the cash flow account.
The initial computed negative balance of the cash flow account was just
the sum of all of the cash transactions of the investment account. This
yielded a 0 balance in the cash flow account, which is a reasonable
approach, but it doesn't reflect the true cash balance represented by
the money market holdings. When I adjust the cash flow balance to
reflect the money market funds, then the funds are counted twice in the
investement account balance.

It seems that I would have to eliminate the positions in the money
market funds in order for the financial account to balance properly, or
make the category for the initial balance in the cash flow account
different from a link to the financial account.

Isn't there a standard way to handle this situation? It seems the most
common setup for financial accounts, and I can't believe Quicken doesn't
handle it automatically. One should be able to tag Money Market
positions so that they show up as a cash balance.

Thanks for any advice or help.

[Guest]

Oops, sorry. Read 'investment account' for 'financial account' in above
post.

nospam@pacbell.net wrote:
I'm using Quicken 2004 for Windows. I created a new investment account by downloading information from the financial institution where the account is managed. Cash and dividends are swept into two money market funds. These money market funds appear correctly in the list of holdings, but there is no indicaiton that they are money market funds. I created a linked cash flow account because I write checks on the account, and want to keep track of them in register form. Dividends/deposits etc. were properly debited from the investment account and credited to the cash flow account. The initial computed negative balance of the cash flow account was just the sum of all of the cash transactions of the investment account. This yielded a 0 balance in the cash flow account, which is a reasonable approach, but it doesn't reflect the true cash balance represented by the money market holdings. When I adjust the cash flow balance to reflect the money market funds, then the funds are counted twice in the investement account balance. It seems that I would have to eliminate the positions in the money market funds in order for the financial account to balance properly, or make the category for the initial balance in the cash flow account different from a link to the financial account. Isn't there a standard way to handle this situation? It seems the most common setup for financial accounts, and I can't believe Quicken doesn't handle it automatically. One should be able to tag Money Market positions so that they show up as a cash balance. Thanks for any advice or help.

nospam@pacbell.net wrote: I'm using Quicken 2004 for Windows. I created a new investment account by downloading information from the financial institution where the account is managed. Cash and dividends are swept into two money market funds. These money market funds appear correctly in the list of holdings, but there is no indicaiton that they are money market funds. I created a linked cash flow account because I write checks on the account, and want to keep track of them in register form. Dividends/deposits etc. were properly debited from the investment account and credited to the cash flow account. The initial computed negative balance of the cash flow account was just the sum of all of the cash transactions of the investment account. This yielded a 0 balance in the cash flow account, which is a reasonable approach, but it doesn't reflect the true cash balance represented by the money market holdings. When I adjust the cash flow balance to reflect the money market funds, then the funds are counted twice in the investement account balance. It seems that I would have to eliminate the positions in the money market funds in order for the financial account to balance properly, or make the category for the initial balance in the cash flow account different from a link to the financial account. Isn't there a standard way to handle this situation? It seems the most common setup for financial accounts, and I can't believe Quicken doesn't handle it automatically. One should be able to tag Money Market positions so that they show up as a cash balance.

If I understand your situation correctly, I think that Quicken
is attempting to handle it correctly

I don't really agree with you that Money Market funds are the
same as cash; and I don't think Quicken does either. Money
market funds are securities much like any other mutual fund; and
though their per-share-price is intended to remain a constant
$1, it is not guaranteed to do so. Cash is not a security,
there are no "shares", and one dollar in cash will always be
worth one dollar. Unlike cash, you can lose money in a money
market fund.

"Sweeping" money into a money market fund consists of purchasing
shares of a mutual fund with cash. The cash is gone and you
then own more shares of the money market fund. When you
purchase other securities using the money market fund, mm shares
are sold, cash is created and used to purchase the securities.
It is possible that your fi does not show this detail on your
statements - though mine does (and my statements occasionally
show both a cash balance and a money market fund balance) - but
I don't think that means it is not happening.

It is not clear from your post that you realize this, but in
Q2004, a linked cash account is not necessary (as it was in
earlier versions); you can write checks directly from the "cash"
balance in the investment account. Still, that the cash must be
true "cash" and not shares of a money market fund. If you write
a check from an investment account with a zero cash balance
(even with a money market fund balance large enough to cover the
check), you will create a negative cash balance in the account;
cash must be present, deposited (transferred) from another
account, or created by selling shares of some security in the
investment account, such as the money market fund.

I do not think there is any meaningful advantage to carrying
your investment cash in a separate cash account in Q2004 (though
to be honest, I have not yet begun using Q2004 for my regular
Quicken finances).

If you personally do not need to distinguish the difference
between cash and money market funds in Quicken, I presume you
could just exclude any money market funds from your investment
account and literally treat the mm fund's transactions like
plain cash transactions. Of course I do not think this will
reflect what is happening in the real world, something that I
personally find important to try to do.

--
John Pollard
First Last at Bellsouth dot net
Please reply to newsgroup