There are a few different account balances that accounts keep track of in order to be able to make investments.
There are 4 Balance Types:
- Cash Available
- Invested Cash
- Asset Value
- Total Cash
Balance Type 1: Cash Available
This is the most dynamic of the three types. It keeps track of the funds available to make an investments. It is the Total Cash minus any pending or potential outgoing transactions, such as any Investments (DOI) that may be in review and haven't been finalized. It also takes into account the minimum cash balance.
Example:
- Total Cash = $100,000
- Pending withdrawals = $5,000
- Pending deposits = $7,000
- Cash allocated to pending investments = $12,000
- Minimum cash balance = $500
Cash Available = $100,000 - $5,000 - $12,000 - $500
Cash Available = $82,500
Balance Type 2: Invested Cash
This is the sum of the funds that have been used to place investments.
Example:
- Total Cash = $100,000
- Cash allocated to pending investments = $12,000
- Asset A initial investment = $30,000
- Asset B initial investment = $17,000
- Asset A current value = $34,000
- Asset B current value = $21,000
Invested Cash = $30,000 + $17,000
Invested Cash = $47,000
Balance Type 3: Asset Value
This is the sum of the value of all non-cash assets held in the account.
Example:
- Total Cash = $100,000
- Cash allocated to pending investments = $12,000
- Asset A initial investment = $30,000
- Asset B initial investment = $17,000
- Asset A current value = $34,000
- Asset B current value = $21,000
Invested Cash = $34,000 + $21,000
Invested Cash = $55,000
Balance Type 4: Total Cash
This is the sum of all the cash held in the account.
Example:
- Total Deposits = $100,000
- Total Credits = $60,000
- Pending withdrawals = $5,000
- Pending deposits = $7,000
- Cash allocated to pending investments = $12,000
- Asset A initial investment = $30,000
- Asset B initial investment = $17,000
- Asset A current value = $34,000
- Asset B current value = $21,000
Total Cash = $100,000 - $60,000
Total Cash = $40,000