Adding investment assets into Wave

Louise_FerdinandLouise_Ferdinand Member Posts: 3

Hello,

What are the best practices to add my investment assets to WaveApps? I understand that Wave currently doesn't support an investment tracker. I just want to view my whole net worth as a whole, so this includes investment I made.

Anyone have tips to do this? Thanks.

edited September 16, 2020 in Accounting Technical Support

Comments

  • BarsinBarsin Administrator Posts: 1,811 admin

    Hey there @Louise_Ferdinand

    I merged your question into the accounting technical support thread since there a lot of accountants who typically scan through this part of the forum.

    My apologies as I'm not an accountant and don't know the best practices for this type of bookkeeping! Hoping someone will chime in here.

  • EnriqueFavaroEnriqueFavaro Member Posts: 4

    @Louise_Ferdinand

    Ideally, the best way would be that wave connects to your investment account and understands how to record the changes in value, but I don't know if that feature has been added and have not used it for myself.

    I think the best practice would be simply to treat it as its own account and make an adjustment at the end of each period. I am going to assume that you are tracking your personal investments.

    Let's say you have an brokerage account and you invest in stocks.

    You will need to have the following accounts:

    Cash - Checking
    Investment - Brokerage (this is an asset account)
    Unrealized gains/losses (this can be a normal P&L account, but it can also be a special P&L account)
    Realized gains/losses (this is a P&L account)

    A quick note

    If you only put the cash into cash equivalents in the brokerage account, you could opt not to make the first following entry. I like to keep things super clean so I would recommend the entry when you first move the cash from one account to the other rather than when you actually purchase stock. Once the money is in the account and you purchase stocks, you make no entry to recognize that purchase since we're only recognizing the transfer when you move the money from the different accounts. If you want to be super GAAP technical, you could have a cash equivalent brokerage account and an investments brokerage account, but that does add an extra step that isn't really that important for personal financials.

    The entries

    For example whenever you put money in the account make the following entry:
    Debit Investment - Brokerage
    Credit Cash - Checking

    If your investments increase or decrease in value, but they are still held in the investment brokerage account then make the following entry:
    Debit Investment - Brokerage
    Credit Unrealized gains/losses

    If they decrease in value, you do the opposite.

    Let's say your investment increases in value and you sell the investment so that converted into cash or a cash equivalent but it is held in the investment account, make the following entry:
    Debit unrealized gains/losses
    Credit realized gains/losses

    If your investments lost value when you sold them and you record a loss, do the opposite.

    When you move the money from the brokerage to your checking account make the following
    Debit cash - checking
    Credit Investment - brokerage

    Sure it's some extra work, but it's super clean. You can generally apply the same idea to a business's investment funded by the business's own cash.

    Hope this helps,

    Enrique Favaro
    Financial consultant
    [email protected]

    edited September 21, 2020
  • Louise_FerdinandLouise_Ferdinand Member Posts: 3

    @EnriqueFavaro said:
    @Louise_Ferdinand

    Ideally, the best way would be that wave connects to your investment account and understands how to record the changes in value, but I don't know if that feature has been added and have not used it for myself.

    I think the best practice would be simply to treat it as its own account and make an adjustment at the end of each period. I am going to assume that you are tracking your personal investments.

    Let's say you have an brokerage account and you invest in stocks.

    You will need to have the following accounts:
    Cash - Checking
    Investment - Brokerage (this is an asset account)
    Unrealized gains/losses (this can be a normal P&L account, but it can also be a special P&L account)
    Realized gains/losses (this is a P&L account)

    If you only put the cash into cash equivalents in the brokerage account, you could have opted not to make that entry, but I like to keep things super clean so I would recommend the entry. Once the money is in the account and you purchase stocks, you make no entry to recognize that purchase. The transfer was the only real transaction to be recorded.

    For example whenever you put money in the account make the following entry:
    Debit Investment - Brokerage
    Credit Cash - Checking

    If your investments increase or decrease in value, but they are still held in the investment brokerage account then make the following entry:
    Debit Investment - Brokerage
    Credit Unrealized gains/losses

    If they decrease in value, you do the opposite.

    Let's say your investment increases in value and you sell the investment so that converted into cash or a cash equivalent but it is held in the investment account, make the following entry:
    Debit unrealized gains/losses
    Credit realized gains/losses

    If your investments lost value when you sold them and you record a loss, do the opposite.

    When you move the money from the brokerage to your checking account make the following
    Debit cash - checking
    Credit Investment - brokerage

    Sure it's some extra work, but it's super clean. You can generally apply the same idea to a business's investment funded by the business's own cash.

    Hope this helps,

    Enrique Favaro
    Financial consultant
    [email protected]

    Thank you for the suggestions, I will apply it soon. My investment is personal but it is quite diverse, so I think I will have to make more than 5 accounts.

    My investments are in Commodity, Property, Foreign Currency, and Digital Items. Not sure if Wave have the ability to connect to an investment platform like Personal Capital.

    edited September 21, 2020
  • JulianPJulianP Administrator Posts: 17 admin

    Hey there @Louise_Ferdinand ! When it comes to connecting to third party platforms like Personal Capital, Wave has a partnership with Zapier that can help you connect tools like these to your Wave account. I suggest having a look at Zapier's available integrations to see if they offer one for Personal Capital. A full description of supported triggers/actions and a list of available pre-made "Zaps" can be found here.

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