I would like to ask your opinion regarding Valuation,
- when a member makes a contribution the more accuarate
valuation date to use is:
a) the valuation of the NAV of the day before the
contribution
b) the valuation of the NAV of the current day of the
contribution
In your opinion what do you consider is more accurate?
regards
TFG
iras1 on
The only date to use is the one specified in your club's Partnership Agreement. Many clubs use the previous valuation date which is a fixed date each month. Others use the valuation on the date of the contribution.
In a message dated 01/31/11 14:57:26 Eastern Standard Time, tfg@bivio.com writes:
Dear Sirs and fellow Bivio Users,
I would like to ask your opinion regarding Valuation,
- when a member makes a contribution the more accuarate valuation date to use is:
a) the valuation of the NAV of the day before the contribution b) the valuation of the NAV of the current day of the contribution
In your opinion what do you consider is more accurate?
regards
TFG
John Rice on
I would recommend that you pick a specific date each month for your valuation no matter what day the contribution is made. This makes your question mute. Our valuation is the 1st of the month and everybody has until the 3rd Friday of the month to mail in their contribution. Otherwise, your club members might try to time the market to get a better valuation.
John Rice
From: Tomas Alberto Fernandez Garcia <tfg@bivio.com> To: club_cafe@bivio.com Sent: Mon, January 31, 2011 11:57:12 AM Subject: club_cafe: OPIONON REGARDING VALUATION DATES
Dear Sirs and fellow Bivio Users,
I would like to ask your opinion regarding Valuation,
- when a member makes a contribution the more accuarate valuation date to use is:
a) the valuation of the NAV of the day before the contribution b) the valuation of the NAV of the current day of the contribution
In your opinion what do you consider is more accurate?
regards
TFG
Andy Butler on
So with my club, I collect all the investments each month and mail them all at once. Our agreement states the valuation date is the day the contribution is received at the brokerage. Does this work? Or are there problems with this approach?
I would recommend that you pick a specific date each month for your valuation no matter what day the contribution is made. This makes your question mute. Our valuation is the 1st of the month and everybody has until the 3rd Friday of the month to mail in their contribution. Otherwise, your club members might try to time the market to get a better valuation.
John Rice
From: Tomas Alberto Fernandez Garcia <tfg@bivio.com> To:club_cafe@bivio.com Sent: Mon, January 31, 2011 11:57:12 AM Subject: club_cafe: OPIONON REGARDING VALUATION DATES
Dear Sirs and fellow Bivio Users,
I would like to ask your opinion regarding Valuation,
- when a member makes a contribution the more accuarate valuation date to use is:
a) the valuation of the NAV of the day before the
contribution b) the valuation of the NAV of the current day of the contribution
In your opinion what do you consider is more accurate?
So with my club, I collect all the investments each month and mail them all at once. Our agreement states the valuation date is the day the contribution is received at the brokerage. Does this work? Or are there problems with this approach?
Dear Andy,
Your approach is fine. In my clubs, it is even a requirement in the partnership agreement that everyone establishes electronic bill pay to automatically send their deposits directly to our club brokerage account each month by a certain date.
They all arrive within a day or two of the specified date, I don't have to chase down payments and at our meeting, we always know how much new cash we have to invest.
I would recommend that you pick a specific date each month for your valuation no matter what day the contribution is made. This makes your question mute. Our valuation is the 1st of the month and everybody has until the 3rd Friday of the month to mail in their contribution. Otherwise, your club members might try to time the market to get a better valuation.
Dear John,
I'm not sure that anyone has ever been able to time the market successfully. I think what is even more important to clubs and to treasurers is that payments be received on a regular basis so that your club knows it will have regular funds for investing. It is also perfectly fine for a club to require quarterly or annual contributions if variation in receiving contributions is an issue.
The only thing to think about if you are using a single valuation date each month is that member ownership percentages change on the date the payment transaction is recorded. If you allow and record transactions a week apart and income is received or you have expenses in between, they will be allocated based on ownership percentages on the date they occur.
For example, suppose you have 3 club members and each owns 1 unit in the club worth $10 on the valuation date of the first of the month. At that point each member owns a 1/3 partnership interest. Suppose a dividend of $60 is received on the 5th of the month. $20 of the dividend income will be allocated to each member.
Then, suppose, a payment of $10 is recorded for 2 of them on the 10th of the month. There are now 2 members with 2 units and 1 member still with one unit. Until the third member payment is received, 2 of the members have a 2/5 ownership interest and one has 1/5 ownership.
If another dividend of $60 is received before the third member payment is received, $24 will be allocated to two of the members and only $12 will be allocated to the third member.
This is not wrong, it is just something everyone should understand. Some clubs think having a single valuation date each month means each member will be "equal". This is pretty much impossible to achieve unless all member transactions are recorded on exactly the same dates, month after month, year after year.
-- Laurie Frederiksen Invest with your friends! www.bivio.com
Our valuation date is set as the last day of the previous month. Payments are to be made to our account before the 15th, but occasionally someone forgets and has to be entered later. All still get the same valuation date. Much simpler for the treasurer.
On Tue, Feb 1, 2011 at 7:48 AM, Laurie Frederiksen <laurie@bivio.biz> wrote:
I would recommend that you pick a specific date each month for your valuation no matter what day the contribution is made. This makes your question mute. Our valuation is the 1st of the month and everybody has until the 3rd Friday of the month to mail in their contribution. Otherwise, your club members might try to time the market to get a better valuation.
Dear John,
I'm not sure that anyone has ever been able to time the market successfully. I think what is even more important to clubs and to treasurers is that payments be received on a regular basis so that your club knows it will have regular funds for investing. It is also perfectly fine for a club to require quarterly or annual contributions if variation in receiving contributions is an issue.
The only thing to think about if you are using a single valuation date each month is that member ownership percentages change on the date the payment transaction is recorded. If you allow and record transactions a week apart and income is received or you have expenses in between, they will be allocated based on ownership percentages on the date they occur.
For example, suppose you have 3 club members and each owns 1 unit in the club worth $10 on the valuation date of the first of the month. At that point each member owns a 1/3 partnership interest. Suppose a dividend of $60 is received on the 5th of the month. $20 of the dividend income will be allocated to each member.
Then, suppose, a payment of $10 is recorded for 2 of them on the 10th of the month. There are now 2 members with 2 units and 1 member still with one unit. Until the third member payment is received, 2 of the members have a 2/5 ownership interest and one has 1/5 ownership.
If another dividend of $60 is received before the third member payment is received, $24 will be allocated to two of the members and only $12 will be allocated to the third member.
This is not wrong, it is just something everyone should understand. Some clubs think having a single valuation date each month means each member will be "equal". This is pretty much impossible to achieve unless all member transactions are recorded on exactly the same dates, month after month, year after year.
-- Laurie Frederiksen Invest with your friends! www.bivio.com
Our valuation date is set as the last day of the previous month. Payments are to be made to our account before the 15th, but occasionally someone forgets and has to be entered later. All still get the same valuation date. Much simpler for the treasurer.
On Tue, Feb 1, 2011 at 7:48 AM, Laurie Frederiksen <laurie@bivio.biz> wrote:
I would recommend that you pick a specific date each month for your valuation no matter what day the contribution is made. This makes your question mute. Our valuation is the 1st of the month and everybody has until the 3rd Friday of the month to mail in their contribution. Otherwise, your club members might try to time the market to get a better valuation.
Dear John,
I'm not sure that anyone has ever been able to time the market successfully. I think what is even more important to clubs and to treasurers is that payments be received on a regular basis so that your club knows it will have regular funds for investing. It is also perfectly fine for a club to require quarterly or annual contributions if variation in receiving contributions is an issue.
The only thing to think about if you are using a single valuation date each month is that member ownership percentages change on the date the payment transaction is recorded. If you allow and record transactions a week apart and income is received or you have expenses in between, they will be allocated based on ownership percentages on the date they occur.
For example, suppose you have 3 club members and each owns 1 unit in the club worth $10 on the valuation date of the first of the month. At that point each member owns a 1/3 partnership interest. Suppose a dividend of $60 is received on the 5th of the month. $20 of the dividend income will be allocated to each member.
Then, suppose, a payment of $10 is recorded for 2 of them on the 10th of the month. There are now 2 members with 2 units and 1 member still with one unit. Until the third member payment is received, 2 of the members have a 2/5 ownership interest and one has 1/5 ownership.
If another dividend of $60 is received before the third member payment is received, $24 will be allocated to two of the members and only $12 will be allocated to the third member.
This is not wrong, it is just something everyone should understand. Some clubs think having a single valuation date each month means each member will be "equal". This is pretty much impossible to achieve unless all member transactions are recorded on exactly the same dates, month after month, year after year.
-- Laurie Frederiksen Invest with your friends! www.bivio.com
I would recommend that you pick a specific date each month for your valuation no matter what day the contribution is made. This makes your question mute. Our valuation is the 1st of the month and everybody has until the 3rd Friday of the month to mail in their contribution. Otherwise, your club members might try to time the market to get a better valuation.
John Rice
From: Tomas Alberto Fernandez Garcia <tfg@bivio.com> To:club_cafe@bivio.com Sent: Mon, January 31, 2011 11:57:12 AM Subject: club_cafe: OPIONON REGARDING VALUATION DATES
Dear Sirs and fellow Bivio Users,
I would like to ask your opinion regarding Valuation,
- when a member makes a contribution the more accuarate valuation date to use is:
a) the valuation of the NAV of the day before the
contribution b) the valuation of the NAV of the current day of the contribution
In your opinion what do you consider is more accurate?
regards
TFG
Laurie Frederiksen on
Tomas,
If your securities prices are being updated automatically, the NAV of the club will change once each day, approximately 8 or 9PM Mountain time. A member payment entry made on the same date as the valuation date will not be finalized until the closing prices for the valuation date have been updated.
Since you are updating your prices manually, your payment entries will not be accurate until you have updated the securities prices for the valuation date you select.
Whether or not you make a payment on a particular date does not affect the unit price for the day.
Laurie Frederiksen
Linda Lee on
Laurie,
How do you set up bill pay to go directly to the brokerage
account? Is this free of charge? Our club's brokerage firm
told me that if I used bill pay, my check would be sent to
the treasurer's address rather than deposited directly into
the brokerage account. Since I have a personal account at
the same brokerage firm, I can set up transfer between
accounts. If I had to transfer directly from my credit
union, I would be charged a fee from the credit union. I
think all this stems from our limitation that only the
president and treasurer have access to the brokerage
account.
Laurie Frederiksen wrote:
>
> Dear Andy,Your approach is fine. In my clubs, it is even a requirement in the partnership agreement that everyone establishes electronic bill pay to automatically send their deposits directly to our club brokerage account each month by a certain date.
> They all arrive within a day or two of the specified date, I don't have to chase down payments and at our meeting, we always know how much new cash we have to invest.
> Laurie Frederiksen
Christine Madden on
Our club is one that strives for equal valuation, so we set
the valuation date as the end of the month. But after
reading the threads, the valuation actually changes as
payments and dividends are received and reimbursements are
made for expenses. We have three members who submit
payments early electronically and others who submit checks
that are deposited near the end of the month. If a dividend
is received before most of the checks are deposited, will
the valuation function equalize the dividend shares among
the members?