You do not have to have equal ownership by partners in an investment club. In fact it is discouraged because, while some might think it simplifies things, it will actually complicate your record keeping.
It also causes issues because potential new members may be priced out of joining and if existing members need to take out any of the money they have invested in the club they will need to leave the club completely.
The unit based accounting used by bivio accommodates members with different levels of ownership accurately and easily.
You are a group managing a portfolio of assets. The portfolio doesn't care who owns how much.
Laurie Frederiksen Invest with your friends! www.bivio.com
Please I need an advise. Someone having access to loan with interest and others having cash of far less value to contribute as an equity. Does this require an equal equity share. What is the danger of equal equity
Jan Neuenschwander on
This was sent to the wrong person.
Sent from my iPhone
Jan Neuenschwander
On Nov 15, 2016, at 8:37 AM, Laurie Frederiksen <laurie@bivio.biz> wrote:
You do not have to have equal ownership by partners in an investment club. In fact it is discouraged because, while some might think it simplifies things, it will actually complicate your record keeping.
It also causes issues because potential new members may be priced out of joining and if existing members need to take out any of the money they have invested in the club they will need to leave the club completely.
The unit based accounting used by bivio accommodates members with different levels of ownership accurately and easily.
You are a group managing a portfolio of assets. The portfolio doesn't care who owns how much.
Laurie Frederiksen Invest with your friends! www.bivio.com
Please I need an advise. Someone having access to loan with interest and others having cash of far less value to contribute as an equity. Does this require an equal equity share. What is the danger of equal equity
Laurie Frederiksen on
No. It did not go to the wrong person. Club Cafe is an email discussion list. Everything sent to the list goes to all the members of the list. That is why you got it.
If you don't want to be part of the list, there is an Unsubscribe link below in my title block that you can click to be removed from the list.
Laurie Frederiksen Invest with your friends! www.bivio.com
On Nov 15, 2016, at 8:37 AM, Laurie Frederiksen <laurie@bivio.biz> wrote:
You do not have to have equal ownership by partners in an investment club. In fact it is discouraged because, while some might think it simplifies things, it will actually complicate your record keeping.
It also causes issues because potential new members may be priced out of joining and if existing members need to take out any of the money they have invested in the club they will need to leave the club completely.
The unit based accounting used by bivio accommodates members with different levels of ownership accurately and easily.
You are a group managing a portfolio of assets. The portfolio doesn't care who owns how much.
Laurie Frederiksen Invest with your friends! www.bivio.com
Please I need an advise. Someone having access to loan with interest and others having cash of far less value to contribute as an equity. Does this require an equal equity share. What is the danger of equal equity
Leo F Cardillo on
Dear All:
Laurie's advice re Equal Equity is Spot ON. Our club has
been thriving for about 60 + years.
In the "Old Days" our Legendary Treasurer, Phil, kept the
equity shares exactly even amongst every member. I loved
Phil like a brother, but I could never have kept up that
accounting. In addition, the calculation of tax issues with
members inevitably coming and going was more than daunting.
BIVIO solves all those concerns and more. While our Club
still prefers about equal ownership, we do not attempt to
keep exactly equal ownership. BIVIO has made it possible for
this Treasurer to concentrate on difficult issues (
inadvertent ownership of foreign stocks, for example),
accurate and timely tax submissions ( 15 March 2017!),
accurate support to widows of passing members, etc., and
still have a life to live!
Our Club does expect all members to pay the same dues each
month, but I do not have to be concerned about the timing of
those payments.
BIVIO is the best thing that our Club ever bought!
Laurie Frederiksen on
Thank you Leo. It can be a hard thing to give up the idea that everyone must be "equal" in ownership of your club. A long time ago, I too felt that was important.
But, when a long time valued active member missed a month because she had a baby, it became very clear that having her in the club was more important than the fact that she hadn't made a contribution one month.
Giving up equal ownership allowed us to easily add some great new members too.
Laurie Frederiksen Invest with your friends! www.bivio.com
Laurie's advice re Equal Equity is Spot ON. Our club has
been thriving for about 60 + years.
In the "Old Days" our Legendary Treasurer, Phil, kept the
equity shares exactly even amongst every member. I loved
Phil like a brother, but I could never have kept up that
accounting. In addition, the calculation of tax issues with
members inevitably coming and going was more than daunting.
BIVIO solves all those concerns and more. While our Club
still prefers about equal ownership, we do not attempt to
keep exactly equal ownership. BIVIO has made it possible for
this Treasurer to concentrate on difficult issues (
inadvertent ownership of foreign stocks, for example),
accurate and timely tax submissions ( 15 March 2017!),
accurate support to widows of passing members, etc., and
still have a life to live!
Our Club does expect all members to pay the same dues each
month, but I do not have to be concerned about the timing of
those payments.
BIVIO is the best thing that our Club ever bought!
Val Johnson on
We are a relatively new club and it seems that members who pay on time or early every month get hit with a higher share of club expenses. In some instances it doesn't seem fair.
Laurie Frederiksen on
By default, expenses are allocated to members based on their ownership percentage on the date the expense is entered.
You can also choose to allocate them "per partnership exception" which will allocate an equal dollar amount to each member regardless of their percent of ownership.
Laurie Frederiksen Invest with your friends! www.bivio.com
We are a relatively new club and it seems that members who pay on time or early every month get hit with a higher share of club expenses. In some instances it doesn't seem fair.
Sharon Holley on
I'm having a hard time entering a withdrawal. We had a member leave 11/19/19, valuation was 11/18/19. The cash was paid out of 5914.40, but the computer calculated 6186.16, difference of 271.76.
Also, transaction cash hasn't been coded as a withdrawal, so it's been taken out twice.
Can ypu help me with this?
Thank you.
Sharon Holley
Fountain valley Ladies Investment League
On Saturday, March 7, 2020, 10:15:50 AM PST, Laurie Frederiksen <laurie@bivio.biz> wrote:
By default, expenses are allocated to members based on their ownership percentage on the date the expense is entered.
You can also choose to allocate them "per partnership exception" which will allocate an equal dollar amount to each member regardless of their percent of ownership.
Laurie Frederiksen Invest with your friends! www.bivio.com
We are a relatively new club and it seems that members who pay on time or early every month get hit with a higher share of club expenses. In some instances it doesn't seem fair.
Linda Glein on
So...because I puzzled over this inquiry...Laurie, you are saying that if an expense is entered during the month before all of the member's monthly investments are in, those who have paid will have a (slightly) larger percentage share than if all of the investments had been recorded before the expense. Therefore they would be allocated a greater share of the expense.
Surely this is an exceedingly nominal amount unless the club is very new, and/or if the expenses are large amounts -- which should not normally be the case. The longer the club is in existence, the lesser the impact, until it would be immaterial.
I suppose this would also be the case if someone is in the habit of paying several months in advance. Again, with diminishing impact as the club's total assets grow.
Changing to 'per partnership exception' should be fully understood before choosing that option, as it may not be what the partners intend.
Linda Glein
Linda
On Sat, Mar 7, 2020 at 10:15 AM Laurie Frederiksen <laurie@bivio.biz> wrote:
By default, expenses are allocated to members based on their ownership percentage on the date the expense is entered.
You can also choose to allocate them "per partnership exception" which will allocate an equal dollar amount to each member regardless of their percent of ownership.
Laurie Frederiksen Invest with your friends! www.bivio.com
We are a relatively new club and it seems that members who pay on time or early every month get hit with a higher share of club expenses. In some instances it doesn't seem fair.
Sharon Holley on
Also I recorded the stock transfer already. Do I need to cancel this withdrawal and show as a partial withdrawal?
On Saturday, March 7, 2020, 02:22:55 PM PST, Sharon Holley via bivio.com <user*25691200001@bivio.com> wrote:
I'm having a hard time entering a withdrawal. We had a member leave 11/19/19, valuation was 11/18/19. The cash was paid out of 5914.40, but the computer calculated 6186.16, difference of 271.76.
Also, transaction cash hasn't been coded as a withdrawal, so it's been taken out twice.
Can ypu help me with this?
Thank you.
Sharon Holley
Fountain valley Ladies Investment League
On Saturday, March 7, 2020, 10:15:50 AM PST, Laurie Frederiksen <laurie@bivio.biz> wrote:
By default, expenses are allocated to members based on their ownership percentage on the date the expense is entered.
You can also choose to allocate them "per partnership exception" which will allocate an equal dollar amount to each member regardless of their percent of ownership.
Laurie Frederiksen Invest with your friends! www.bivio.com
We are a relatively new club and it seems that members who pay on time or early every month get hit with a higher share of club expenses. In some instances it doesn't seem fair.
Margaret Wentworth on
The solution to this problem is to pick one valuation date for all member payments no matter when during the month they pay. We use the last day of each month for our valuation date. That way each $50.00 member payment buys exactly the same units and any expense charged is based on percentage owned by each member. This also makes it easy to check member payments for the year at tax time.
I'm having a hard time entering a withdrawal. We had a member leave 11/19/19, valuation was 11/18/19. The cash was paid out of 5914.40, but the computer calculated 6186.16, difference of 271.76.
Also, transaction cash hasn't been coded as a withdrawal, so it's been taken out twice.
Can ypu help me with this?
Thank you.
Sharon Holley
Fountain valley Ladies Investment League
On Saturday, March 7, 2020, 10:15:50 AM PST, Laurie Frederiksen <laurie@bivio.biz> wrote:
By default, expenses are allocated to members based on their ownership percentage on the date the expense is entered.
You can also choose to allocate them "per partnership exception" which will allocate an equal dollar amount to each member regardless of their percent of ownership.
Laurie Frederiksen Invest with your friends! www.bivio.com
We are a relatively new club and it seems that members who pay on time or early every month get hit with a higher share of club expenses. In some instances it doesn't seem fair.
John W Ranby Trustee PGM Cariboo Trust on
Sharon:
You have introduced a separate issue into an existing
conversation.
Bivio is very generous in providing help for individual,
club-specific issues through its support desk.
I suggest you send an email to support@bivio.com with a
description of your problem. Laurie can provide specific
assistance by accessing your club's transaction records.
Jack Ranby
polymerguy on
I'll leave the investment account to the experts, but IMO there seems to be two issues here:
The allocation of expenses - which should be done based on the number of shares each member holds at the time of the expense (or equally allocation as Laurie indicates). That should be equitable if you are allocating shares (depositing dues) on a single date during the month.
If you are allocating shares when dues are paid, or collecting dues in advance, I would suggest moving to a Suspense Account.
We have always done all our dues deposits on the 15th of the month of all members. This eliminates one of the problem(s) that you list below since all deposits are recorded at the same time. Dues paid in advance, or late dues are all offset in a Suspense Account (https://www.bivio.com/site-help/bp/Suspense_Account_Help. I have an old green book (Better Investing?) on Investment Club Accounting from years ago that outlines the Suspense Account process better than online information today. Someone else may know of a good reference.
An Example: Someone pays $100/mo in dues and decides to pay a $1,000 in advance for 10 months. We would deposit the $1,000 into checking (our money management) then enter a corresponding -$1,000 into the Suspense Account representing the "liability" that we, the club, owe that person. You now have access to the cash, but the net impact to the club is 0 as the two offset each other.
On the 15th, we would "collect" their $100 from the Suspense Account which would reduce the club's liability to them to $900 (a -$900 balance in the Suspense Account) and this would continue month-over-month until the offset went to 0. The way I like to think about the Suspense Account is it is the deviation between the club's ideal value (where everyone pays their dues at the same time, every time with no advanced dues) and reality where you must deal with the exceptions.
Correspondingly, if someone is late sending in their dues, we collect their regular payment from the Suspense Account on the 15th which raises the Suspense Account. When they pay, we enter the corresponding transfer between Checking and Suspense.
In reality, what we really do is collect dues by cash or check at the meeting. When the Treasurer makes the deposit to the checking account, we make a single monthly corresponding entry between the Suspense account and Checking account that accounts for all the deviations.
Jimmy
James P. Dickerson
TLP Investment Club
From: club_cafe@bivio.com <club_cafe@bivio.com> On Behalf Of Linda Glein via bivio.com Sent: Saturday, March 07, 2020 6:33 PM To: club_cafe@bivio.com Subject: Re: [club_cafe] Re: Equal Equity
So...because I puzzled over this inquiry...Laurie, you are saying that if an expense is entered during the month before all of the member's monthly investments are in, those who have paid will have a (slightly) larger percentage share than if all of the investments had been recorded before the expense. Therefore they would be allocated a greater share of the expense.
Surely this is an exceedingly nominal amount unless the club is very new, and/or if the expenses are large amounts -- which should not normally be the case. The longer the club is in existence, the lesser the impact, until it would be immaterial.
I suppose this would also be the case if someone is in the habit of paying several months in advance. Again, with diminishing impact as the club's total assets grow.
Changing to 'per partnership exception' should be fully understood before choosing that option, as it may not be what the partners intend.
Linda Glein
Linda
On Sat, Mar 7, 2020 at 10:15 AM Laurie Frederiksen <laurie@bivio.biz> wrote:
By default, expenses are allocated to members based on their ownership percentage on the date the expense is entered.
You can also choose to allocate them "per partnership exception" which will allocate an equal dollar amount to each member regardless of their percent of ownership.
Laurie Frederiksen Invest with your friends! www.bivio.com
We are a relatively new club and it seems that members who pay on time or early every month get hit with a higher share of club expenses. In some instances it doesn't seem fair.
Michael Grove on
We just set the valuation date to the transaction date for each contribution. That way everyone is treated equitably regardless of deposit amount or timing. And in fact each of our members deposits a slightly different amount so that the treasurer can tell who made the deposit and credit the appropriate account. One of the powers of the Bivio software is that it manages all of this so that member contributions are credited properly.
I'll leave the investment account to the experts, but IMO there seems to be two issues here:
The allocation of expenses - which should be done based on the number of shares each member holds at the time of the expense (or equally allocation as Laurie indicates). That should be equitable if you are allocating shares (depositing dues) on a single date during the month.
If you are allocating shares when dues are paid, or collecting dues in advance, I would suggest moving to a Suspense Account.
We have always done all our dues deposits on the 15th of the month of all members. This eliminates one of the problem(s) that you list below since all deposits are recorded at the same time. Dues paid in advance, or late dues are all offset in a Suspense Account (https://www.bivio.com/site-help/bp/Suspense_Account_Help. I have an old green book (Better Investing?) on Investment Club Accounting from years ago that outlines the Suspense Account process better than online information today. Someone else may know of a good reference.
An Example: Someone pays $100/mo in dues and decides to pay a $1,000 in advance for 10 months. We would deposit the $1,000 into checking (our money management) then enter a corresponding -$1,000 into the Suspense Account representing the "liability" that we, the club, owe that person. You now have access to the cash, but the net impact to the club is 0 as the two offset each other.
On the 15th, we would "collect" their $100 from the Suspense Account which would reduce the club's liability to them to $900 (a -$900 balance in the Suspense Account) and this would continue month-over-month until the offset went to 0. The way I like to think about the Suspense Account is it is the deviation between the club's ideal value (where everyone pays their dues at the same time, every time with no advanced dues) and reality where you must deal with the exceptions.
Correspondingly, if someone is late sending in their dues, we collect their regular payment from the Suspense Account on the 15th which raises the Suspense Account. When they pay, we enter the corresponding transfer between Checking and Suspense.
In reality, what we really do is collect dues by cash or check at the meeting. When the Treasurer makes the deposit to the checking account, we make a single monthly corresponding entry between the Suspense account and Checking account that accounts for all the deviations.
So...because I puzzled over this inquiry...Laurie, you are saying that if an expense is entered during the month before all of the member's monthly investments are in, those who have paid will have a (slightly) larger percentage share than if all of the investments had been recorded before the expense. Therefore they would be allocated a greater share of the expense.
Surely this is an exceedingly nominal amount unless the club is very new, and/or if the expenses are large amounts -- which should not normally be the case. The longer the club is in existence, the lesser the impact, until it would be immaterial.
I suppose this would also be the case if someone is in the habit of paying several months in advance. Again, with diminishing impact as the club's total assets grow.
Changing to 'per partnership exception' should be fully understood before choosing that option, as it may not be what the partners intend.
Linda Glein
Linda
On Sat, Mar 7, 2020 at 10:15 AM Laurie Frederiksen <laurie@bivio.biz> wrote:
By default, expenses are allocated to members based on their ownership percentage on the date the expense is entered.
You can also choose to allocate them "per partnership exception" which will allocate an equal dollar amount to each member regardless of their percent of ownership.
Laurie Frederiksen Invest with your friends! www.bivio.com
We are a relatively new club and it seems that members who pay on time or early every month get hit with a higher share of club expenses. In some instances it doesn't seem fair.
V Johnson on
Again, we're a relatively new club and the other unanticipated outcome is the effect on ownership % when a new member joins months after start-up expenses like State filing fees, bivio, insurance, etc have been paid.
We just set the valuation date to the transaction date for each contribution. That way everyone is treated equitably regardless of deposit amount or timing. And in fact each of our members deposits a slightly different amount so that the treasurer can tell who made the deposit and credit the appropriate account. One of the powers of the Bivio software is that it manages all of this so that member contributions are credited properly.
I'll leave the investment account to the experts, but IMO there seems to be two issues here:
The allocation of expenses - which should be done based on the number of shares each member holds at the time of the expense (or equally allocation as Laurie indicates). That should be equitable if you are allocating shares (depositing dues) on a single date during the month.
If you are allocating shares when dues are paid, or collecting dues in advance, I would suggest moving to a Suspense Account.
We have always done all our dues deposits on the 15th of the month of all members. This eliminates one of the problem(s) that you list below since all deposits are recorded at the same time. Dues paid in advance, or late dues are all offset in a Suspense Account (https://www.bivio.com/site-help/bp/Suspense_Account_Help. I have an old green book (Better Investing?) on Investment Club Accounting from years ago that outlines the Suspense Account process better than online information today. Someone else may know of a good reference.
An Example: Someone pays $100/mo in dues and decides to pay a $1,000 in advance for 10 months. We would deposit the $1,000 into checking (our money management) then enter a corresponding -$1,000 into the Suspense Account representing the "liability" that we, the club, owe that person. You now have access to the cash, but the net impact to the club is 0 as the two offset each other.
On the 15th, we would "collect" their $100 from the Suspense Account which would reduce the club's liability to them to $900 (a -$900 balance in the Suspense Account) and this would continue month-over-month until the offset went to 0. The way I like to think about the Suspense Account is it is the deviation between the club's ideal value (where everyone pays their dues at the same time, every time with no advanced dues) and reality where you must deal with the exceptions.
Correspondingly, if someone is late sending in their dues, we collect their regular payment from the Suspense Account on the 15th which raises the Suspense Account. When they pay, we enter the corresponding transfer between Checking and Suspense.
In reality, what we really do is collect dues by cash or check at the meeting. When the Treasurer makes the deposit to the checking account, we make a single monthly corresponding entry between the Suspense account and Checking account that accounts for all the deviations.
So...because I puzzled over this inquiry...Laurie, you are saying that if an expense is entered during the month before all of the member's monthly investments are in, those who have paid will have a (slightly) larger percentage share than if all of the investments had been recorded before the expense. Therefore they would be allocated a greater share of the expense.
Surely this is an exceedingly nominal amount unless the club is very new, and/or if the expenses are large amounts -- which should not normally be the case. The longer the club is in existence, the lesser the impact, until it would be immaterial.
I suppose this would also be the case if someone is in the habit of paying several months in advance. Again, with diminishing impact as the club's total assets grow.
Changing to 'per partnership exception' should be fully understood before choosing that option, as it may not be what the partners intend.
Linda Glein
Linda
On Sat, Mar 7, 2020 at 10:15 AM Laurie Frederiksen <laurie@bivio.biz> wrote:
By default, expenses are allocated to members based on their ownership percentage on the date the expense is entered.
You can also choose to allocate them "per partnership exception" which will allocate an equal dollar amount to each member regardless of their percent of ownership.
Laurie Frederiksen Invest with your friends! www.bivio.com
We are a relatively new club and it seems that members who pay on time or early every month get hit with a higher share of club expenses. In some instances it doesn't seem fair.