A recent blog post /comment thread on Ermine’s Simple Living in Somerset was the inspiration for this post – about the tools/processes I use for tracking my finances.
Ermine and I find ourselves relying on a 2004 piece of Windows software, Quicken 2004, produced by a US company that pulled out of the UK market for personal finance software in 2005. It continues to offer QuickBooks, for business accounts, but thankfully Quicken 2004 still works, albeit without any live-off-internet functionality. Credit due to Microsoft for the backwards compatibility too (you listening, Apple?).
Much as I had assumed that I was in a minority of about one, until I read Ermine’s blog post, a lot of online banking/credit card systems do offer some support for Quicken file formats so I suspect there are a few tens of thousands of us still out there.
But in recent years a wealth of new tools/capabilities have emerged, and as a result my approach has evolved somewhat.
These days I use a mixture of
1) Quicken (2004)
3) Google Sheets
4) Interactive Brokers
Quicken is my source of truth for spending – credit cards, current accounts, etc.
Until a year or so ago I categorised every transaction. These days the advent of contactless payments has meant a proliferation of tiny transactions on my statement and I only categorise large payments or transactions in certain categories – e.g. charity donations – tho I do still categorise 90%+ of my spending.
Quicken is very helpful for letting me pull out specific spending categories – e.g. charity donations, property rental spending, bank interest, previous tax payments, etc. Thankfully, many banks/card providers do let me export either in native Quicken format (despite Quicken having left the market 10+ years ago!) and/or a CSV format, and I use csvconverter.biz to map CSV files into Quicken format. As a result, manual keying, while not unheard of, is mostly eliminated.
Quicken also has a record of every transaction in all my investment accounts except for Interactive Brokers. However because it won’t import prices at all (any more) let alone live ones, I don’t properly update valuations. What matters, and what I use Quicken as source of truth for, is the Buy/Sell transactions. I use Quicken for my CGT reporting for these accounts.
I also try to capture all dividend/income (except IB) in Quicken. This is a key metric I track on my FIRE journey. Quicken lets me look at it by account, by time period, by category, and export quickly in Excel. It is fast and effective, once the data is in place.
I use Excel for tracking the value of my investment portfolio, and update it fully at least monthly. It knows my target asset allocation and helps me monitor the deltas between target and actual, consolidating positions across accounts. A version of this spreadsheet is available via my blog (or search ‘FvL investment tracking spreadsheet’), in Google Sheets.
I also use this sheet to track my investment expenses – both at an account level (e.g. platform monthly fees) and at a fund/ETF level (with my estimate of TERs/OCFs).
This tracking sheet knows relatively little about my income. It does know the notional income yield of each holding but doesn’t know what actually happens.
I use separate ad hoc Excel spreadsheets for help with tax reporting, e.g. of property rental income/expenses (exporting spending from Quicken).
I have the ‘live valuation’ bit of my Excel spreadsheet in GoogleSheets. This is really just a vanity tool – to let me eyeball quickly, mid-month, what is going on.
My most important investment account provider is IB. I don’t keep a parallel log of these transactions, but rely on IB’s reporting tools to be able to find a) dividends/income b) year end statements c) Capital Gains. IB has excellent off-the-shelf reports, which will operate to any date range (max 12 months), as well as a build-your-own-report feature called FlexReports (that I don’t use, but like to know I could).
A product wishlist….
With the advent (in the UK) of OpenBanking, the process of integrating financial data from disparate sources is becoming easier. But it it is some way off a point that would really help me here.
In the meantime there is no shortage of apps/projects that claim to provide the perfect financial tracking solution. As yet none can yet cater for me.
- Ability to import all regular bank accounts – card statements, current accounts, categorise spending, and do reports/queries quickly (by date range and with ‘pivot table’ filtering/organising, or CSV output).
- Ability to import investment portfolios – and allow me flexibly to track security prices, dividends and compare to each other, indices, in different currencies, etc. Ability to categorise holdings against arbitrary asset types, geographies, investment styles (i.e. tag things with an arbitrary number of properties), and build custom reporting around these.
- Ability to import investment transaction histories – including dividends.
- High level of security and no funny business about data ownership. I am not as paranoid about cloud-based data as the Ermine, but I do need to trust the solution in the same way I trust Google/Microsoft/Apple/similar.
The above list really doesn’t sound that complicated to build, but nobody has done it for UK investors as of the time of writing! I would pay perhaps £100 per year for this solution but anything like £20/month sounds too pricey to tempt me.
I live in hope….
Sooner or later, it happens.
Maybe your superstar young colleague quits his (it is almost always his, not her) well-paid job, to start his own company. And gently lets it be known he is raising a bit of money, with tax breaks….
Maybe you have just had your biggest yet annual bonus, and the tax consequences are making you sick. Your mate at work mentions a startup he is putting money into, which “reduces his income tax bill”. So you google ‘investments that reduce your income tax bill’….
Maybe your mate’s boy wonder kid is setting up his second business, and in the first one your mate made five times his money, so presumably on his second time around he’ll make even more….
Maybe you have been reading the weekend papers columns about angel investing….
Maybe your IFA has suggested if you don’t like VCT funds, you could consider EIS funds….
Or maybe you’ve sold a business, and not very long after some of those great characters you hired are starting to branch out on their own. They wouldn’t mind some help, and that money you made wouldn’t have been all possible without these folks, so it’s only right to put a bit of it back to work in their hands….
Sooner or later, an angel investing opportunity will cross your door. After all, you’re financially savvy, you’re in the London eco-system, and you are intellectually curious.
I first started angel investing almost twenty years ago. I have made a number of angel investments since then. I’ve made some mistakes, and I’ve had some successes.Read the rest of this entry »
We live in extraordinary markets. Time for a quarterly look back at my portfolio.
What’s been going on?
In the last three months:
- Theresa May has finally thrown in the towel. Her replacement, either BoJo or Mr Hunt the Culture Minister, will take over on 22 July, barring upset. This follows a European parliamentary election, in which nothing very surprising occurred.
- Huawei has been in the news a lot. As has Mr Trump.
- The conservatives won an Australian election, against the odds.
- Neil Woodford, a person in the UK, suffered a run from depositors.
June saw some of the most benign market movements I can remember. I don’t have a clear sense of why. Here’s the outcome for the month:
Taking a slightly longer view than one month, one of the most notable features of Q2 was the fall in the pound from $1.31 to $1.26, on the back of UK political nonsense. Equities rose in April, fell in May, and more than recovered in June; FTSE moved in Q2 from about 7279 to 7426, and S&P 500 from about 2830 to about 2930. Bonds rose much more smoothly, up over 2%.
The June market movement, weighted for my target allocation, was up 4.0% (with FX pretty much flat). My portfolio rose by almost exactly this.
What’s extraordinary about this year so far is that markets, as a whole (as weighted by my allocation), have risen over 15%. In six months. These returns are pretty extraordinary. But you wouldn’t catch it in the mainstream media, what with the Woodford/etc woes to read about instead.Read the rest of this entry »