Creating data files

Introduction

The main thing you have to do to use this program effectively is creating and maintaining good records of your transactions when you invest. This page gives you an overview of this process. Maintaining these records takes some time and effort, depending on how complicated your situation is. The good news is you do not have to have lots of investments and lots of transactions to invest effectively. For example, investing in stocks using a single low-cost global index fund is more effective than investing in multiple individual companies. A good investment strategy can be made of just a few investments, such as one ETF for each asset class you want to own. For example you just need two investments if you only want to invest in stocks and bonds, or stocks and gold. Hence keeping good records of your transactions will not be hard if you use a simple strategy.

Structure of the investments

The first thing you will have to do is to define the structure of your investments in the data files. The structure includes the list of investment accounts you use, the list of investments you own, the currencies that are involved, the periods that covers the tax years in your country. The structure needs to be defined only once at the beginning, and also each time you make structural changes to you strategy, for example if you create a new investment account with a new platform, or if you decide to start investing in a new fund.

Recording all transactions

To work effectively, the program also needs to know the details about each transaction related to your investments. This includes when you buy or sell stocks, or receive income such as dividends. This requires ongoing effort, as most investors will have regular transactions. Again the good news is that you do not have to have lots of transactions to invest effectively. For most people, the best strategy is to buy and hold investments for the long term, or to buy the same investments at regular intervals, for example each time you receive your salary (ie: dollar cost averaging). There are multiple ways to keep these records. You can either decide to update these transactions in the data each time there is a new transaction, or you may prefer to create the records for all new transactions on a monthly, quarterly, or annual basis.

How to start

The best way to start using this program is to follow the Quick Start Guide to get an idea of how the program works. You should then use the example data files provided as a starting point for your own personal records. You should then read the section about the structure of the data files to understand what each type of data file represents. Do not forget to make good backups of your data files. It is recommended to create backups of these files regularly, and to keep older copies of your files. This will help you revert changes in case you get into a situation where some errors arise after you make some changes to the data files.

Historical records

Using this program is easier if you have just started investing and you have very few historical transactions that needs to be recorded in the data files. But if you already have a long history of past transactions, there are multiple approaches. First, you can ignore all transactions related to investments you do not own any more, as these details are much less relevant. Can can just focus on creating records for investments your still own. For these investments, you have two main options. One option is to create proper records for each historical transaction to get very accurate data, but this can take a lot of time and effort.

Another option is to record a single transaction in the data for each investment your still own, and to use the average purchase price. For example let’s say you bought 20 shares of a company in the past. You first bought 10 shares at $100 each each, and later you bought 10 other shares of the same company at $150 each. Ideally you could create records for each of these two transactions. But you could also pretend you bought all of these 20 shares at the same time at a price of $125 each. In that case you just need to create a single transaction in your records to save time and effort. This only works if you are confident you know the accurate average purchase price. The average purchase price may be provided by your investment platform, but this information may be inaccurate if you have bought investments and transferred them across multiple platforms over time. Also you should try to provide accurate amounts in the purchase fees, so the program is able to calculate an accurate amount for the total cost of ownership.