Examples of investment activity

Setting up an IRA:

So you just celebrated your birthday again, and you've decided that you just can't put it off any longer - it's time to start planning for your retirement. So you take that $2000 you've been saving from your paychecks down to Smith Barney and open an IRA. You want to keep close tabs on your contributions, however, so you come home and want to set up iBank to help you track the account. Here's what you need to do:

  1. Click the Account button on the toolbar to create a new account.
  2. Choose "Investment" as the account type and enter "Smith Barney IRA" as its name.
  3. Since you opened the account with $2000, enter that amount as the starting balance and click "Create Account". (For simplicity's sake, let's assume that Smith Barney doesn't allow direct downloading and so we cancel the online access setup.)
  4. The new account will appear in the source list. Select it to display its transaction view:

  5. You will see your starting balance listed in the register. Each time you make a contribution to the account, add a "Deposit" transaction (or a "Transfer" - see below). When you direct your custodian to buy and sell shares, use "Buy" and "Sell" transactions to track the purchases and sales.
  6. Sit back and relax, knowing that you'll be safe and secure when retirement finally arrives (provided you actually make those contributions!).

Purchasing shares from a checking account:

Let's assume that you already have an investment account set up in iBank. Your monthly salary comes in (direct deposited into your checking account), and you determine that you have $500.00 to invest. After exploring your options, you decide that the best way to spend that money would be to purchase 5.5556 shares of Apple stock at $90.00 each. Here's how you would track this in iBank:

  1. Select your checking account in the source list. Add a transaction for your paycheck:

  2. Transfer the $500.00 to your investment account so that you can buy stock with it. Add a transaction to your checking account:

  3. Select your investment account in the source list. Add a transaction to buy Apple stock:

  4. Switch to the Portfolio to view updated information about your holdings (click "Get Quotes" on the toolbar to download current quotes):

  5. Think about diversifying your investments a bit!

Selling shares:

Following the example above, let's say that you decide to diversify your portfolio a bit. The first step is to sell some of your Apple stock (prices are up anyways, so why not?). Perhaps later you can use that money to buy shares in Microsoft (hey, we're diversifying, right?). So you decide to sell 150 shares of your Apple stock, and put the money you get into your savings account for now. Here's how you would track this in iBank:

  1. Select your investment account in the source list. Add a transaction to sell Apple stock (make sure to enter the correct sale price - iBank will enter the current quote by default):

  2. Select your savings account in the source list. Add a transfer transaction to move the cash you just earned from your investment account into your savings account:

  3. Switch to the Portfolio to view updated information about your holdings (click "Get Quotes" on the toolbar to download current quotes):

Receiving a gift of stock:

You know that rich uncle who amassed a fortune as a day trader? Right, the one who just passed away. Well, it turns out that, even though he never met you, he must have thought well of you, because he left you 500 shares of Google stock. Imagine that! Here's how you would track this in iBank:

  1. Assuming that you don't already have an investment account set up, create a new one. It doesn't matter that you don't actually have a brokerage account and all you own are those 500 Google shares - as far as iBank is concerned, you are your own brokerage account. Call the investment account "My Investments" and give it a starting balance of 0.
  2. Add a "Move Shares" transaction to enter the Google shares. Since you got them for free, leave the price at 0:

    (Notice that your account balance remains at 0, because you haven't spent or received any cash.)

  3. Switch to the Portfolio to watch yourself get rich and ponder how sweet life really is:

Receiving cash dividends:

Now, everybody knows that you're a hard worker. You may have just been gifted a fortune in Google stock, but you're not ready to retire just yet. No! Instead, you're going to let the investment sit and watch it grow as you keep your nose to the grindstone. Lucky for you, Google just decided to start paying out cash dividends, so every month you can get a little bit richer. To track each dividend in iBank:

  1. Select your investment account in the source list. Add a transaction and set its type to "Dividend."

  2. Because this is a cash dividend, enter how much you received in the "Amount" field. Do not enter anything in the "Security", "Shares", "Price", or "Comm." fields. Feel free to enter a payee or memo if desired.

  3. Now you will see a cash balance in your investment account. Since you got a check in the mail from Google, however, this still doesn't quite represent how you received the dividend. In reality, you took that check and deposited it directly into your checking account. To reflect this in iBank, add a transfer transaction to move the dividend into your checking account:

    To specify the destination account for the transfer, use the "Category" field in the transaction editor.

  4. Add another one of these each month, or set up a scheduled transaction to do it for you. Try to find some time to spend all the extra money in between your work hours!

Receiving stock dividends:

Instead of receiving cash dividends on your Google stock each month, let's say you'll be getting stock dividends instead. Here's how you track them in iBank:

  1. Select your investment account in the source list. Add a transaction and set its type to "Dividend."

  2. Because this is a stock dividend, enter the security symbol and number of shares received, but do not type in an amount. Feel free to enter a payee or memo if desired.

    (Notice that your account balance remains at 0, because you haven't spent or received any cash.)

  3. Switch to the Portfolio to see the gains on your new shares.

Tracking a stock split:

Now, it just so happens that Google continues to trend upward in the market. The price per share reaches a truly astronomical level, so Google execs decide to do a 3-for-1 split, just for the heck of it. This is what you need to do to enter the split into iBank:

  1. Select your investment account in the source list. Add a transaction and set its type to "Split."

  2. Enter Google's security symbol. iBank will automatically show you the current price per share (based on the most recent quote it downloaded):

  3. Calculate the number of shares you gained in the split and enter this into the transaction. In a 2:1 split, the number of shares gained is equal to the number you owned prior to the split. In a 3:1, you gain twice the number of shares previously owned, etc. The price in this case is irrelevant, so you can either leave this alone or change it to zero - either way, it will not affect the value of your securities:

  4. Click Get Quotes on the toolbar to update the price of your stocks, then switch to the Portfolio to view your changes. Consider an early retirement as you wait for the price to continue rising!

Tracking stock option puts and calls:

After all this time, it looks like your hard work has finally paid off. Google just decided to hire you, and they've granted you stock options! Here's how you would track those in iBank:

  1. Let's say Google gives you the option to buy 200 shares of their stock. In financial terms, you have opened a long position in the options market. Add a "Buy to Open" transaction to your investment account. You may enter the stock symbol for reference, but don't enter any shares or price information (because you haven't actually purchased the shares yet - you simply acquired the option to buy). Leave the amount at 0 as well, because you didn't purchase the option - it was given to you for free. Notice that neither the cash value of your account nor the market value of your Portfolio has changed.

  2. To monitor the performance of Google's stock before you exercise your options (let's assume you don't already own any Google shares), add Google to your Portfolio as a watchlist item. Select the Portfolio in the source list and click the plus button to add a new security. Enter "Google" as the name, "GOOG" as the symbol, "Stock" as the type, and any notes you want to keep track of, then click "OK" to add it to the Portfolio. Make sure you have the "Watch" filter button selected at the bottom of the window to view the stock in your security table, and you can easily check the current price and change information for that stock. Click get quotes Get Quotes on the toolbar to update quotes for your securities.

  3. Now, let's say the stock takes a little dip and you decide it is a good time to exercise your options and buy the 200 shares. In iBank, you have to enter three transactions: one to transfer money into the investment account, one to purchase the shares, and one to close the position on your option. First, add a "Transfer" transaction to your investment account to obtain the necessary funds from your checking account. Set the category to the name of your checking account (you'll find it at the bottom of the drop-down category list) and enter the amount to be transferred as a positive number.

    Second, add a "Buy" transaction and enter "GOOG" as the symbol, "200" as the number of shares, and whatever price you paid per share.

    Third, add a "Sell to Close" transaction, entering "GOOG" as the symbol for reference, and leaving all other fields blank. Since you exercised the option instead of selling it, you don't enter an amount (after all, you didn't earn money from any sale). This transaction is just used to indicate that the position is now closed and you no longer hold any stock options.