Are dividends used to buy other stocks double counted?

Support Questions
1

Hi there,

So, I’m wondering, if you get a bunch of dividends from different stocks, and once it reaches a certain amount you use it to buy stocks (not necessarily the same ones, so that’s not a DRIP use case), how does Capitally avoid counting that as two “in” cash flow transactions?
What I mean by that is the dividend payout would be an “in” cashflow, and then after a while when more stock is purchased with those accumulated proceeds, I guess there’s no way for Capitally to know that the same proceeds were used or whether money was transferred to the broker from a bank account for the purpose of that purchase. Is that correct? Does it mean it will be considered as 2 “in” cash flow transactions, making the account value appear bigger than it actually is because of the double counting? Is it what the upcoming double-entry bookkeeping feature intending to fix or do I have things mixed up?

My main concern right now is avoiding double counting leading to an incorrect and inflated portfolio value.

Thanks

2

Hey Francois,

Short answer: they’re not.

Long answer: Portfolio value is a sum of market value of all your holdings. If you sell all your stock - portfolio value is 0. If you receive a dividend, your portfolio value won’t change automatically.
In both cases, you probably received some cash. You need to add that cash balance, to increase your portfolio value to account for it (this is where double-entry bookkeeping will come handy). Now, if you buy some stocks with this money, you will update the cash balance again, so again, the overall portfolio value will be correct.

I hope it explains it well :slight_smile:

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