Advanced Investing: Stocks and Capital Gains

This tutorial moves beyond simple income and expenses to handle Assets held at Cost. This is the foundation of tracking investments, stocks, and currency trading in Beancount.

Step 1: Defining Accounts

Investment accounts look like regular asset accounts, but they hold Commodities (like “AAPL” or “GOOG”) instead of just Currency (USD).

Add these to your main.beancount:

2000-01-01 open Assets:Brokerage:Cash        USD
2000-01-01 open Assets:Brokerage:Stocks      AAPL, GOOG
2000-01-01 open Income:Dividends
2000-01-01 open Income:Capital-Gains

Step 2: Buying Stock (Cost Basis)

When you buy stock, you aren’t just transferring value; you are acquiring specific “lots” of an asset at a specific price. Beancount tracks this Cost Basis.

On Jan 1st, you buy 10 shares of AAPL at $150 each.

2024-01-01 * "Buy AAPL"
  Assets:Brokerage:Stocks      10 AAPL {150.00 USD}
  Assets:Brokerage:Cash     -1500.00 USD

• 10 AAPL: The quantity and commodity.
• {150.00 USD}: The Cost per share. This attaches a “price tag” to these specific 10 shares.

Step 3: Buying More (Multiple Lots)

On Feb 1st, the price drops. You buy 5 more shares at $140.

2024-02-01 * "Buy more AAPL"
  Assets:Brokerage:Stocks       5 AAPL {140.00 USD}
  Assets:Brokerage:Cash      -700.00 USD

You now own 15 shares of AAPL, but Beancount sees them as two distinct Lots:

1. 10 shares @ $150
2. 5 shares @ $140

Step 4: Selling and Realizing Gains

On March 1st, the price hits $160. You decide to sell 5 shares. But which 5 shares? The expensive ones ($150) or the cheap ones ($140)?

This is the Booking Method. By default, Beancount lets you choose specific lots (Specific Identification).

Let’s sell 5 shares from the first batch ($150).

2024-03-01 * "Sell AAPL"
  Assets:Brokerage:Stocks      -5 AAPL {150.00 USD} @ 160.00 USD
  Assets:Brokerage:Cash       800.00 USD
  Income:Capital-Gains        -50.00 USD

Breaking it down:

1. -5 AAPL {150.00 USD}: We are removing 5 shares that had a cost of $150.
2. @ 160.00 USD: We sold them at a market price of $160.
3. Assets:Brokerage:Cash 800.00 USD: We received $800 cash (5 * $160).
4. Income:Capital-Gains -50.00 USD: The profit.

The Math:

• Cost of sold shares: 5 * $150 = $750.
• Cash received: 5 * $160 = $800.
• Profit: $800 - $750 = $50.

Since Income is negative, we record -50.00 USD. The transaction balances: -750 (Stock Cost) + 800 (Cash) - 50 (Profit) = 0.

Step 5: Dividends

Dividends are simply income.

2024-03-15 * "Apple Dividend"
  Assets:Brokerage:Cash        15.00 USD
  Income:Dividends            -15.00 USD

Summary

1. Use {price} to attach cost basis when buying.
2. Use {cost} @ price when selling to calculate P/L.
3. Profit is the difference between the Cost Basis and the Sell Price.