Wednesday, July 11, 2007

TD Ameritrade's Cost Basis Tool

I had previously mentioned that TD Ameritrade has added a gain/loss tracking tool called GainsKeeper to their website. I have used GainsKeeper before, and I believe that it can be very helpful to keep track of investment cost basis. However, there are a few obstacles to their new tool.

For me, GainsKeeper didn't have any cost basis information for investments that I bought before 2003. I had to go through a process known as "baselining" to tell the online tool what I originally paid for my stocks and mutual funds. For the most part, this process is straightforward if you have your cost basis handy. However, if a stock or fund has undergone a stock split, spinoff, or merger, it can get very confusing. For example, I had a mutual fund that was merged into another one, and I had to manually figure out the cost basis, and update it in GainsKeeper.

TD Ameritrade uses this GainsKeeper cost basis information to figure the Unrealized Gain (Loss) on your monthly statement. If it doesn't know what you paid, it shows "NP" for the Average Cost, and leaves the gain amount blank. On the other hand, I noticed that the GainsKeeper cost basis doesn't seem to be reflected on the "Balances & Positions" page. New trades are almost immediately reflected here. This leads me to conclude that TD Ameritrade uses two different sources for the cost basis data. The fact that they do this can lead to confusion.

Going forward, I think that GainsKeeper has the potential to provide accurate cost basis information at a glance. But, I do have a wishlist of improvements to GainsKeeper that I think would be easy to make. First of all, I would like to see a bigger font size; my eyes are not what they used to be. I'd like to see green and red colors used to indicate a gain or a loss. Another improvement would be for GainsKeeper to flag securities that could potentially trigger a wash sale if you buy or sell. Currently, GainsKeeper divides all gains into long and short term, giving you a subtotal for each. How about adding a line that gives you the total gain too? Lastly, I found that if you make a trade during the day, GainsKeeper doesn't reflect that trade until the next day. This could be updated in real-time.


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